Registration No. 2-65223
811-2944
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / X /
PRE-EFFECTIVE AMENDMENT NO. ___ / /
POST-EFFECTIVE AMENDMENT NO. 37 / X /
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 / X /
Amendment No. 40 / X /
OPPENHEIMER QUEST VALUE FUND, INC
(formerly, Quest for Value Fund, Inc.)
- -------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Two World Trade Center, New York, New York 10048-0203
- -------------------------------------------------------------------------
(Address of Principal Executive Offices)
(212) 323-0200
- -------------------------------------------------------------------------
(Registrant's Telephone Number)
Andrew J. Donohue, Esq.
OppenheimerFunds, Inc.
Two World Trade Center, New York, New York 10048-0203
- -------------------------------------------------------------------------
(Name and Address of Agent for Service)
It is proposed that this filing will become effective:
/ / Immediately upon filing pursuant to paragraph (b)
/ X / On February 26, 1996 pursuant to paragraph (b)
/ / 60 days after filing pursuant to paragraph (a)(1)
/ / On _________, pursuant to paragraph (a)(1)
/ / 75 days after filing, pursuant to paragraph (a) (2)
/ / On _________, pursuant to paragraph (a)(2)
of Rule 485.
- -------------------------------------------------------------------------
Registrant has registered an indefinite number of shares under the
Securities Act of 1933 pursuant to Rule 24f-2 promulgated under the
Investment Company Act of 1940. A Rule 24f-2 Notice for the Registrant's
fiscal year ended October 31, 1995, was filed on December 28, 1995.
<PAGE>
CROSS REFERENCE SHEET
Part A of
Form N-1A
Item No. Prospectus Heading
1 Front Cover Page
2 Expenses; A Brief Overview of the Fund
3 Financial Highlights; Performance of the Fund
4 Front Cover Page; Investment Objective and
Policies; How the Fund is Managed--Organization
and History
5 How the Fund is Managed; Expenses; Back Cover
5A Performance of the Fund
6 How the Fund is Managed--Organization and
History; The Transfer Agent; Dividends, Capital
Gains and Taxes
7 How to Buy Shares; How to Exchange Shares;
Special Investor Services; Service Plan for
Class A Shares; Distribution and Service Plan
for Class B Shares; Distribution and Service
Plan for Class C Shares; How to Sell Shares;
Shareholder Account Rules and Policies
8 How to Sell Shares; How to Exchange Shares;
Special Investor Services
9 *
Part B of
Form N-1A Heading in Statement of
Item No. Additional Information
10 Cover Page
11 Cover Page
12 *
13 Investment Objective and Policies; Other
Investment Techniques and Strategies; Other
Investment Restrictions
14 How the Fund is Managed - Directors and Officers
of the Fund
15 How the Fund is Managed - Major Shareholders
16 How the Fund is Managed; Distribution and
Service Plans; Additional Information About the
Fund; Back Cover
17 Brokerage Policies of the Fund
18 Additional Information about the Fund
19 About Your Investment Account-How to Buy Shares;
How to Sell Shares; How to Exchange Shares
20 Dividends, Capital Gains and Taxes
21 How the Fund is Managed; Brokerage Policies of
the Fund; Additional Information About the Fund
- The Distributor; Distribution and Service
Plans
22 Performance of the Fund
23 Financial Statements
______________________________________
* Not applicable or negative answer.
<PAGE>
OPPENHEIMER QUEST VALUE FUND, INC.
Supplement dated February 26, 1996 to the
Prospectus dated February 26, 1996
The Prospectus is changed as follows:
In addition to paying dealers the regular commission for (1)
sales of Class A shares stated in the sales charge table in "Buying Class
A Shares" on page 27, (2) sales of Class B shares described in the third
paragraph in "Distribution and Service Plan for Class B Shares" on page
33, or (3) sales of Class C shares described in the third paragraph in
"Distribution and Service Plan for Class C Shares" on page 34, the
Distributor will pay additional commission to each participating broker,
dealer and financial institution that has a sales agreement with the
Distributor (these are referred to as "participating firms") for Class A,
B and C shares of the Fund sold in "qualifying transactions" (the
"promotion"). The additional commission will be .75% of the offering
price of shares of the Fund sold by a registered representative or sales
representative of a participating firm during the promotion. If the
additional commission is paid on the sale of Class A shares of $1 million
or more and those shares are redeemed within 13 months from the end of the
month in which they were purchased, the participating firm will be
required to return the additional commission.
"Qualifying transactions" are sales of Class A, Class B and/or
Class C shares of any one or more of the Oppenheimer funds (except money
market funds and tax-exempt funds) for (1) new Individual Retirement
Accounts ("IRAs"), using the OppenheimerFunds prototype IRA agreement,
including rollover IRAs, SEP IRAs and SAR-SEP IRAs, where the IRA is
established and the purchase payment is received during the period from
January 1, 1996 through April 15, 1996 (the "promotion period") or, (2)
IRAs using the A.G. Edwards & Sons, Inc. prototype IRA agreement,
including rollover IRAs, SEP IRAs and SAR-SEP IRAs, where the purchase
payment is received during the promotion period. "Qualifying
transactions" also include purchases of shares of Oppenheimer funds for
existing OppenheimerFunds or A.G. Edwards & Sons, Inc. prototype IRAs,
rollover IRAs, SEP IRAs and SAR-SEP IRAs effected through a rollover from
an investor, or through a direct rollover or trustee-to-trustee transfer
from another retirement plan trustee, of IRA assets or other employee
benefit plan assets from an account or investment other than an account
or investment in the Oppenheimer funds. To qualify, the payment for the
shares purchased for a rollover to an OppenheimerFunds prototype IRA or
for a rollover, direct rollover or trustee-to-trustee transfer to an A.G.
Edwards & Sons, Inc. prototype IRA must be received during the promotion
period, or the acceptance of a direct rollover or trustee-to-trustee
transfer to an OppenheimerFunds prototype IRA must be acknowledged by the
trustee of the OppenheimerFunds prototype IRA during the promotion
period. "Qualifying transactions" do not include (1) purchases of Class
A shares intended but not yet made under a Letter of Intent, and (2)
purchases of Class A, Class B and/or Class C shares with the redemption
proceeds from an existing OppenheimerFunds account.
February 26, 1996 PS0225.002
<PAGE>
Oppenheimer Quest Value Fund, Inc.
Prospectus dated February 26, 1996
Oppenheimer Quest Value Fund, Inc. (the "Fund") is a mutual
fund that seeks capital appreciation through investment in securities
(primarily equity securities) of companies believed by the Manager to be
undervalued in the marketplace in relation to factors such as the
companies' assets, earnings, growth potential and cash flows. Equity
securities in which the Fund may invest are common stocks and preferred
stocks; bonds, debentures and notes convertible into common stocks; and
depository receipts for such securities. Please refer to "Investment
Objective and Policies" for more information about the types of securities
the Fund invests in and the risks of investing in the Fund.
This Prospectus explains concisely what you should know before
investing in the Fund. Please read this Prospectus carefully and keep it
for future reference. You can find more detailed information about the
Fund in the February 26, 1996 Statement of Additional Information. For
a free copy, call OppenheimerFunds Services, the Fund's Transfer Agent,
at 1-800-525-7048, or write to the Transfer Agent at the address on the
back cover. The Statement of Additional Information has been filed with
the Securities and Exchange Commission and is incorporated into this
Prospectus by reference (which means that it is legally part of this
Prospectus).
(OppenheimerFunds logo)
Shares of the Fund are not deposits or obligations of any bank, are not
guaranteed by any bank, are not insured by the F.D.I.C. or any other
agency, and involve investment risks, including the possible loss of the
principal amount invested.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
Contents
ABOUT THE FUND
Expenses
A Brief Overview of the Fund
Financial Highlights
Investment Objective and Policies
How the Fund is Managed
Performance of the Fund
ABOUT YOUR ACCOUNT
How to Buy Shares
Class A Shares
Class B Shares
Class C Shares
Special Investor Services
AccountLink
Automatic Withdrawal and Exchange Plans
Reinvestment Privilege
Retirement Plans
How to Sell Shares
By Mail
By Telephone
How to Exchange Shares
Shareholder Account Rules and Policies
Dividends, Capital Gains and Taxes
Appendix A: Special Sales Charge Arrangements for
Shareholders
of the Former Quest for Value
Funds
<PAGE>
ABOUT THE FUND
Expenses
The Fund pays a variety of expenses directly for management of
its assets, administration, distribution of its shares and other services,
and those expenses are subtracted from the Fund's assets to calculate the
Fund's net asset value per share. All shareholders therefore pay those
expenses indirectly. Shareholders pay other expenses directly, such as
sales charges and account transaction charges. The following tables are
provided to help you understand your direct expenses of investing in the
Fund and your share of the Fund's business operating expenses that you
might expect to bear indirectly, based upon the Fund's fees and expenses
in effect as of the date of this Prospectus after giving effect to the
acquisition by OppenheimerFunds, Inc. (formerly, Oppenheimer Management
Corporation) described below.
- Shareholder Transaction Expenses are charges you pay when you
buy or sell shares of the Fund. Please refer to "About Your Account,"
from pages through , for an explanation of how and when these charges
apply.
ClassClassClass
A SharesB SharesC Shares
Maximum Sales Charge
on Purchases
(as a % of
offering price) 5.75%NoneNone
Sales Charge on
Reinvested Dividends None NoneNone
Deferred Sales Charge
(as a % of the
lower of the
original purchase
price or redemption
proceeds) None(1)5% in the first 1% if
year, declining redeemed
to 1% in thewithin 12
sixth year months of
and eliminatedpurchase(2)
thereafter(2)
Exchange Fee NoneNoneNone
(1) If you invest $1 million or more ($500,000 or more for purchases by
OppenheimerFunds prototype 401(k) plans) in Class A shares, you may
have to pay a sales charge of up to 1% if you sell your shares
within 12, 18 or 24 calendar months from the end of the calendar
month during which you purchased those shares, depending upon when
you purchased such shares. See "How to Buy Shares - Class A
Shares," below.
(2) See "How to Buy Shares - Class B Shares" and "How to Buy Shares -
Class C Shares" below, for more information on the contingent
deferred sales charges.
- Annual Fund Operating Expenses are paid out of the Fund's assets
and represent the Fund's expenses in operating its business. For example,
the Fund pays management fees to its investment adviser, OppenheimerFunds,
Inc. (referred to in this Prospectus as the "Manager"). The rates of the
Manager's fees are set forth in "How the Fund is Managed," below. The
Fund has other regular expenses for services, such as transfer agent fees,
custodial fees paid to the bank that holds its portfolio securities, audit
fees and legal expenses. Those expenses are detailed in the Fund's
Financial Statements in the Statement of Additional Information.
The numbers in the table below are projections of the Fund's
business expenses based on the Fund's expenses in its fiscal year ended
October 31, 1995. These amounts are shown as a percentage of the average
net assets of each class of the Fund's shares for that year. The 12b-1
Fees for Class A shares are service fees (the maximum fee is 0.25% of
average annual net assets of that class) and the asset-based sales charge
of 0.25% of the average annual net assets of that class. For Class B and
Class C shares, the 12b-1 Fees are the service fees (the maximum fee is
0.25% of average annual net assets of those classes) and the annual asset-
based sales charge of 0.75% of the average annual net assets of the class.
These plans are described in greater detail in "How to Buy Shares."
The actual expenses for each class of shares in future years may be
more or less than the numbers in the table, depending on a number of
factors, including changes in the actual value of the Fund's assets
represented by each class of shares.
Class Class Class
A Shares B Shares C Shares
Management Fees 1.00% 1.00% 1.00%
12b-1 Distribution
Plan Fees .50% 1.00% 1.00%
Other Expenses .18% .21% .26%
----- ----- -----
Total Fund Operating
Expenses 1.68% 2.21% 2.26%
- Examples. To try to show the effect of these expenses on an
investment over time, we have created the hypothetical examples shown
below. Assume that you make a $1,000 investment in each class of shares
of the Fund, and the Fund's annual return is 5%, and that its operating
expenses for each class are the ones shown in the Annual Fund Operating
Expenses table above and that Class B shares automatically convert into
Class A shares six years after their purchase. If you were to redeem your
shares at the end of each period shown below, your investment would incur
the following expenses by the end of 1, 3, 5 and 10 years:
1 year 3 years 5 years 10 years*
Class A Shares $74 $107 $144 $245
Class B Shares $72 $99 $138 $229
Class C Shares $33 $71 $121 $260
If you did not redeem your investment, it would incur the following
expenses:
Class A Shares $74 $107 $144 $245
Class B Shares $23 $69 $118 $229
Class C Shares $23 $71 $121 $260
*The Class B expenses in years 7 through 10 are based on the Class A
expenses shown above, because the Fund automatically converts your Class
B shares into Class A shares after 6 years. Because of the asset-based
sales charge and the contingent deferred sales charge on Class B and Class
C shares, long term Class B and Class C shareholders could pay the
economic equivalent of more than the maximum front-end sales charge
allowed under applicable regulations. For Class B shareholders, the
automatic conversion of Class B shares to Class A shares is designed to
minimize the likelihood that this will occur. Please refer to "How to Buy
Shares - Class B Shares" for more information.
These examples show the effect of expenses on an investment, but are
not meant to state or predict actual or expected costs or investment
returns of the Fund, all of which will vary.
<PAGE>
A Brief Overview of the Fund
Some of the important facts about the Fund are summarized below,
with references to the section of this Prospectus where more complete
information can be found. You should carefully read the entire Prospectus
before making a decision about investing in the Fund. Keep the Prospectus
for reference after you invest, particularly for information about your
account, such as how to sell or exchange shares.
- What is the Fund's Investment Objective? The Fund seeks capital
appreciation through investment in securities (primarily equity
securities) of companies believed by the Manager to be undervalued in the
marketplace in relation to factors such as the companies' assets,
earnings, growth potential and cash flows.
- What Does the Fund Invest in? The equity securities in which the
Fund invests are common stocks and preferred stocks; bonds, debentures and
notes convertible into common stocks; and depository receipts for such
securities. To provide liquidity, the Fund typically invests a part of
its assets in various types of U.S. government securities and money market
instruments. For temporary defensive purposes, the Fund may invest up to
100% of its assets in such securities. These investments are more fully
explained in "Investment Objective and Policies," starting on page .
- Who Manages the Fund? The Fund's investment adviser (the
"Manager") is OppenheimerFunds, Inc., which supervises the Fund's
investment program and handles its day-to-day business. The Manager
(including a subsidiary) manages investment company portfolios having over
$40 billion in assets as of December 31, 1995. The Manager is paid an
advisory fee by the Fund, based on its net assets. The Fund's sub-adviser
is OpCap Advisors (the "Sub-Adviser"), a subsidiary of Oppenheimer
Capital, which is paid a fee by the Manager. The Sub-Adviser provides
day-to-day portfolio management of the Fund. The Fund's portfolio manager
is employed by the Sub-Adviser and is primarily responsible for the
selection of the Fund's securities. The Fund's Board of Directors,
elected by shareholders, oversees the Manager, the Sub-Adviser and the
portfolio manager. Please refer to "How the Fund is Managed," starting
on page for more information about the Manager, the Sub-Adviser and
their fees.
- How Risky is the Fund? All investments carry risks to some
degree. It is important to remember that the Fund is designed for long-
term investors. The Fund's investments in stocks and bonds are subject
to changes in their value from a number of factors such as changes in
general stock and bond market movements, the change in value of particular
stocks because of an event affecting the issuer or changes in interest
rates that can affect bond prices. These changes affect the value of the
Fund's investments and its price per share. Investments in foreign
securities involve additional risks not associated with investments in
domestic securities, including risks associated with changes in currency
rates.
While the Manager tries to reduce risks by diversifying investments,
by carefully researching securities before they are purchased for the
portfolio, and in some cases by using hedging techniques, there is no
guarantee of success in achieving the Fund's objective, and your shares
may be worth more or less than their original cost when you redeem them.
Please refer to "Investment Objective and Policies" starting on page for
a more complete discussion of the Fund's investment risks.
- How Can I Buy Shares? You can buy shares through your dealer or
financial institution, or you can purchase shares directly through the
Distributor by completing an Application or by using an Automatic
Investment Plan under AccountLink. Please refer to "How To Buy Shares"
on page __ for more details.
- Will I Pay a Sales Charge to Buy Shares? The Fund has three
classes of shares. All classes have the same investment portfolio but
have different expenses. Class A shares are offered with a front-end
sales charge, starting at 5.75%, and reduced for larger purchases.
Purchases of $1 million or more of Class A shares have no initial sales
charge but are subject to a contingent deferred sales charge of up to 1%
if held for less than 12, 18 or 24 months, depending upon when you
purchased such shares. Class B and Class C shares are offered without a
front-end sales charge, but may be subject to a contingent deferred sales
charge if redeemed within six years or 12 months, respectively, of buying
them. There is also an annual asset-based sales charge on each class of
shares. Please review "How To Buy Shares" starting on page for more
details, including a discussion about factors you and your financial
advisor should consider in determining which class may be appropriate for
you.
- How Can I Sell My Shares? Shares can be redeemed by mail or by
telephone call to the Transfer Agent on any business day, or through your
dealer. Please refer to "How To Sell Shares" on page . The Fund also
offers exchange privileges to other Oppenheimer funds, described in "How
to Exchange Shares" on page .
- How Has the Fund Performed? The Fund measures its performance
by quoting its average annual total return and cumulative total return,
which measure historical performance. Those returns can be compared to
the returns (over similar periods) of other funds. Of course, other funds
may have different objectives, investments, and levels of risk. The
Fund's performance can also be compared to a broad stock market index,
which we have done on pages __ and __. Please remember that past
performance does not guarantee future results.
<PAGE>
Financial Highlights
The table on the following pages presents selected financial
information about the Fund, including per share data, expense ratios and
other data based on the Fund's average net assets. This information has
been audited by KPMG Peat Marwick LLP, the Fund's independent auditors for
such period, whose report on the Fund's financial statements for the
fiscal year ended October 31, 1995 is included in the Statement of
Additional Information.
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A
------------------------------------------------------------------------------------
YEAR ENDED OCTOBER 31,
1995 1994 1993 1992 1991 1990(2) 1989(2)
=====================================================
<S> <C> <C> <C> <C> <C> <C>
<C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.59 $12.51 $11.71 $10.61 $ 7.84 $9.85
$8.99
- ---------------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss)(5) .12 .09 .05 .04 .09 .18 .24
Net realized and unrealized gain
(loss) on investments 2.71 .50 1.34 1.77 2.84 (1.38) 1.09
------- ------- ------- ------- ------- ------ -----
Total income (loss) from
investment operations 2.83 .59 1.39 1.81 2.93 (1.20) 1.33
- ---------------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment income (.08) (.04) (.05) (.07) (.16) (.26) (.10)
Distributions from net realized
gain on investments (.83) (.47) (.54) (.64) -- (.55) (.37)
------- ------- ------- ------- ------- ------ -----
Total dividends and distributions
to shareholders (.91) (.51) (.59) (.71) (.16) (.81) (.47)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.51 $12.59 $12.51 $11.71 $10.61 $7.84
$9.85
======= ======= ======= =======
======= ====== =====
=====================================================
=====================================================
=======================
TOTAL RETURN, AT NET ASSET VALUE(6) 24.74% 5.01% 12.27% 18.45% 37.94%
(13.43)% 15.68%
=====================================================
=====================================================
=======================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $282,615 $238,085 $245,320 $142,939 $79,914 $49,740
$77,205
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .90%(7) .72% .40% .53% 1.06% 1.71%
2.31%
Expenses 1.68%(7) 1.71% 1.75% 1.75% 1.83% 1.82%
1.81%
- ---------------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 36.0% 49.0% 27.0% 41.0% 48.0% 51.0%
30.0%
</TABLE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS A
------------------------------------------------
PERIOD FROM
MAY 1, 1987
TO OCT. 31, YEAR ENDED APRIL 30,
1988(2) 1987(2,3) 1987(2) 1986(2)
=====================================================
=======================================
<S> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $7.94 $9.44 $9.47 $7.40
- --------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss)(5) .09 .03 .09 .06
Net realized and unrealized gain
(loss) on investments 1.38 (1.14) .81 2.33
------- ------- -------- -------
Total income (loss) from
investment operations 1.47 (1.11) .90 2.39
- --------------------------------------------------------------------------------------------
Dividends and distributions to
shareholders:
Dividends from net investment
income (.05) (.09) (.07) (.09)
Distributions from net realized
gain on investments (.37) (.30) (.86) (.23)
------- ------- -------- -------
Total dividends and distributions
to shareholders (.42) (.39) (.93) (.32)
- --------------------------------------------------------------------------------------------
Net asset value, end of period $8.99 $7.94 $9.44 $9.47
======= ======= ======== =======
=====================================================
=======================================
TOTAL RETURN, AT NET ASSET VALUE(6) 19.54% (12.19)% 10.25% 33.66%
=====================================================
=======================================
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (in thousands) $83,228 $91,255 $104,538 $64,331
- --------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .94% .76%(8) 1.23% 1.18%
Expenses 2.21% 2.24%(8) 2.17% 2.18%
- --------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 15.0% 21.0% 34.0% 68.0%
</TABLE>
1. For the period from September 2, 1993 (inception of offering) to October 31,
1993.
2. Per share data has been retroactively restated to reflect a 200% stock
dividend as of July 1, 1991.
3. Oppenheimer Quest Value Fund, Inc. changed its fiscal year end to October 31
in 1987.
4. Offering Price.
5. Based on average shares outstanding for the period.
6. Total return shown assumes reinvestment of all dividends and distributions
but does not reflect deductions for sales charges. Aggregate (not
annualized) total return is shown for any period shorter than one year.
7. Average net assets for the year ended October 31, 1995, for Classes A, B,
and C were $257,239,913, $25,392,617 and $6,711,023, respectively.
8. Annualized.
9. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended October 31, 1995 were $89,609,378 and $116,160,440,
respectively.
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS CLASS B CLASS C
------------------------------------ -----------------------------------
PERIOD PERIOD
ENDED ENDED
YEAR ENDED OCTOBER 31, OCT. 31, YEAR ENDED OCTOBER
31, OCT. 31,
1995 1994 1993(1) 1995 1994 1993(1)
=====================================================
=====================================================
===============
<S> <C> <C> <C> <C> <C> <C>
PER SHARE OPERATING DATA:
Net asset value, beginning of period $12.53 $12.51 $12.66(4) $12.52 $12.50 $12.66(4)
- -------------------------------------------------------------------------------------------------------------------------
Income (loss) from investment operations:
Net investment income (loss)(5) .05 .02 (.01) .04 .01 (.01)
Net realized and unrealized gain
(loss) on investments 2.69 .50 (.14) 2.70 .51 (.15)
------ ------ ------ ------ ------ ------
Total income (loss) from
investment operations 2.74 .52 (.15) 2.74 .52 (.16)
- -------------------------------------------------------------------------------------------------------------------------
Dividends and distributions to shareholders:
Dividends from net investment
income (.07) (.03) -- (.08) (.03) --
Distributions from net realized
gain on investments (.83) (.47) -- (.83) (.47) --
------ ------ ------ ------ ------ ------
Total dividends and distributions
to shareholders (.90) (.50) -- (.91) (.50) --
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $14.37 $12.53 $12.51 $14.35 $12.52 $12.50
====== ====== ====== ======
====== ======
=====================================================
=====================================================
===============
TOTAL RETURN, AT NET ASSET VALUE(6) 24.08% 4.43% (1.19)% 24.10%
4.45% (1.26)%
=====================================================
=====================================================
===============
RATIOS/SUPPLEMENTAL DATA:
- -------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (in thousands) $38,557 $14,373 $2,015 $10,140 $3,581 $221
- -------------------------------------------------------------------------------------------------------------------------
Ratios to average net assets:
Net investment income (loss) .36%(7) .14% (1.19)%(8) .31%(7) .09%
(.90)%(8)
Expenses 2.21%(7) 2.24% 2.27%(8) 2.26%(7) 2.28% 2.27%(8)
- -------------------------------------------------------------------------------------------------------------------------
Portfolio turnover rate(9) 36.0% 49.0% 27.0% 36.0% 49.0% 27.0%
</TABLE>
1. For the period from September 2, 1993 (inception of offering) to October 31,
1993.
2. Per share data has been retroactively restated to reflect a 200% stock
dividend as of July 1, 1991.
3. Oppenheimer Quest Value Fund, Inc. changed its fiscal year end to October 31
in 1987.
4. Offering Price.
5. Based on average shares outstanding for the period.
6. Total return shown assumes reinvestment of all dividends and distributions
but does not reflect deductions for sales charges. Aggregate (not annualized)
total return is shown for any period shorter than one year.
7. Average net assets for the year ended October 31, 1995, for Classes A, B,
and C were $257,239,913, $25,392,617 and $6,711,023, respectively.
8. Annualized.
9. The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio securities
owned during the period. Securities with a maturity or expiration date at the
time of acquisition of one year or less are excluded from the calculation.
Purchases and sales of investment securities (excluding short-term securities)
for the period ended October 31, 1995 were $89,609,378 and $116,160,440,
respectively.
<PAGE>
Investment Objective and Policies
Objective. The Fund seeks capital appreciation through investment in
securities (primarily equity securities) of companies believed by the
Manager to be undervalued in the marketplace in relation to factors such
as the companies' assets, earnings, growth potential and cash flows.
Investment Policies and Strategies. The Sub-Adviser manages the
portfolio of the Fund in accordance with the Fund's investment objective
and policies pursuant to a Subadvisory Agreement with the Manager.
The equity securities in which the Fund invests are common stocks
and preferred stocks; bonds, debentures and notes convertible into common
stocks; and depository receipts for such securities. To provide liquidity
for the purchase of new instruments and to effect redemptions of shares,
the Fund typically invests a part of its assets in various types of U.S.
government securities and high quality, short-term debt securities with
remaining maturities of one year or less such as government obligations,
certificates of deposit, bankers' acceptances, commercial paper, short-
term corporate securities and repurchase agreements ("money market
instruments"). For temporary defensive purposes, the Fund may invest up
to 100% of its assets in such securities. At any time that the Fund for
temporary defensive purposes invests in such securities, to the extent of
such investments, it is not pursuing its investment objective.
- Can the Fund's Investment Objective and Policies Change? The
Fund has an investment objective, which is described above, as well as
investment policies it follows to try to achieve its objective.
Additionally, the Fund uses certain investment techniques and strategies
in carrying out those investment policies. Except as indicated, the
investment objective and policies described above are fundamental
policies; the Fund's investment policies and practices described elsewhere
in this Prospectus or in the Statement of Additional Information are not
"fundamental" unless stated to be "fundamental".
Fundamental policies are those that cannot be changed without the
approval of a "majority" of the Fund's outstanding voting shares. The
term "majority" is defined in the Investment Company Act to be a
particular percentage of outstanding voting shares (and this term is
explained in the Statement of Additional Information). The Fund's Board
of Directors may change non-fundamental policies without shareholder
approval, although significant changes will be described in amendments to
this Prospectus.
- Stock Investment Risks. Because the Fund normally invests a
substantial portion of its assets in stocks, the value of the Fund's
portfolio will be affected by changes in the stock markets. At times, the
stock markets can be volatile and stock prices can change substantially.
This market risk will affect the Fund's net asset value per share, which
will fluctuate as the values of the Fund's portfolio securities change.
Not all stock prices change uniformly or at the same time and not all
stock markets move in the same direction at the same time. Other factors
can affect a particular stock's prices, such as poor earnings reports by
an issuer, loss of major customers, major litigation against an issuer,
or changes in government regulations affecting an industry. Not all of
these factors can be predicted.
The Fund attempts to limit market risks by diversifying its
investments, that is, by not holding a substantial amount of the stock of
any one company and by not investing too great a percentage of the Fund's
assets in any one company. Because changes in market prices can occur at
any time, there is no assurance that the Fund will achieve its investment
objective, and when you redeem your shares, they may be worth more or less
than what you paid for them.
- Foreign Securities. The Fund may purchase foreign securities
that are listed on a domestic or foreign securities exchange, traded in
domestic or foreign over-the-counter markets or represented by American
Depository Receipts. There is no limit to the amount of such foreign
securities the Fund may acquire. The Fund may buy securities in any
country, including emerging market countries. The Fund will hold foreign
currency only in connection with the purchase or sale of foreign
securities.
- Foreign securities have special risks. For example, foreign
issuers are not subject to the same accounting and disclosure requirements
that U.S. companies are subject to. The value of foreign investments may
be affected by changes in foreign currency rates, exchange control
regulations, expropriation or nationalization of a company's assets,
foreign taxes, delays in settlement of transactions, changes in
governmental economic or monetary policy in the U.S. or abroad, or other
political and economic factors. The Fund may invest in emerging market
countries; such countries may have relatively unstable governments,
economies based on only a few industries that are dependent upon
international trade and reduced secondary market liquidity. More
information about the risks and potential rewards of investing in foreign
securities is contained in the Statement of Additional Information.
- Investment in Convertible Securities. The Fund invests in
convertible fixed income securities to seek its investment objective.
Such convertible securities are bonds, debentures or notes that may be
converted into or exchanged for a prescribed amount of common stock of the
same or a different issue within a particular period of time at a
specified price or formula. The Fund considers convertible securities to
be "equity equivalents" because of the conversion feature, and the
security's rating has less impact on the investment decision than in the
case of non-convertible securities.
The Fund's investments may include investment-grade securities rated
lower than "Baa3" by Moody's Investors Service, Inc. ("Moody's") or "BBB-"
by Standard & Poor's Corporation ("Standard & Poor's")(commonly known as
"junk bonds"), or having comparable ratings by other rating organizations,
although it is the present intention of the Fund to invest no more than
5% of its assets in securities rated lower than Baa3/BBB-. High yield,
lower-grade securities often have speculative characteristics and special
risks that make them riskier investments than investment grade securities.
The Fund may invest in securities rated as low as "C" or "D". The Fund
does not intend to invest in bonds that are in default. See the Appendix
to the Statement of Additional Information for a more complete general
description of Moody's and Standard & Poor's ratings.
In addition to credit risks, described below, debt securities
are subject to changes in their value due to changes in prevailing
interest rates. When prevailing interest rates fall, the value of
already-issued debt securities generally rise. When interest rate rise,
the values of already-issued debt securities generally decline. The
magnitude of these fluctuations will often be greater for a longer-term
debt securities than short-term debt securities. Changes in the value of
securities held by the Fund mean that the Fund's share prices can go up
or down when interest rates change because of the effect of the change on
the value of the Fund's portfolio of debt securities. Credit risk relates
to the ability of the issuer to meet interest or principal payments on a
security as they become due. Generally, higher yielding lower grade
bonds, are subject to credit risks to a greater extent than lower
yielding, investment-grade bonds.
- Portfolio Turnover. A change in the securities held by the Fund
is known as "portfolio turnover." The Fund ordinarily does not engage in
short-term trading to try to achieve its objective. As a result, the
Fund's portfolio turnover (excluding turnover of securities having a
maturity of one year or less) is not expected to be more than 100% each
year. The "Financial Highlights" table above shows the Fund's portfolio
turnover rate during past fiscal years.
Portfolio turnover affects brokerage costs, dealer markups and other
transaction costs, and results in the Fund's realization of capital gains
or losses for tax purposes. It may also affect the Fund's ability to
qualify as a "regulated investment company" under the Internal Revenue
Code for tax deductions for dividends and capital gains distributions the
Fund pays to shareholders. The Fund qualified in its last fiscal year and
intends to do so in the coming year, although there is no guarantee that
it will qualify.
Other Investment Techniques and Strategies. The Fund may also use the
investment techniques and strategies described below. These techniques
involve certain risks. The Statement of Additional Information contains
more information about these practices, including limitations on their use
that may help to reduce some of the risks.
- Investing in Small, Unseasoned Companies. The Fund may invest in
securities of small, unseasoned companies. These are companies that have
been in continuous operation for less than three years, counting the
operations of any predecessors. Securities of these companies may have
limited liquidity (which means that the Fund may have difficulty selling
them at an acceptable price when it wants to) and the prices of these
securities may be volatile. The Fund may not invest more than 15% of its
total assets in securities of small, unseasoned issuers. See "Investing
in Small, Unseasoned Companies" in the Statement of Additional Information
for a further discussion of the risks involved in such investments.
- Hedging. As described below, the Fund may purchase and sell
certain kinds of futures contracts, forward contracts, and options on
futures and broadly-based stock indices. These are all referred to as
"hedging instruments." The Fund does not use hedging instruments for
speculative purposes, and has limits on the use of them, described below.
The hedging instruments the Fund may use are described below and in
greater detail in "Other Investment Techniques and Strategies" in the
Statement of Additional Information.
The Fund may buy and sell options, futures and forward contracts for
a number of purposes. It may do so to try to manage its exposure to the
possibility that the prices of its portfolio securities may decline, or
to establish a position in the securities market as a temporary substitute
for purchasing individual securities. Some of these strategies, such as
selling futures, buying puts and writing covered calls, hedge the Fund's
portfolio against price fluctuations. Other hedging strategies, such as
buying futures and call options, tend to increase the Fund's exposure to
the securities market.
Forward contracts are used to try to manage foreign currency risks
on the Fund's foreign investments. Foreign currency options are used to
try to protect against declines in the dollar value of foreign securities
the Fund owns, or to protect against an increase in the dollar cost of
buying foreign securities.
- Futures. The Fund may buy and sell futures contracts that relate
to broadly-based stock indices (these are referred to as Stock Index
Futures) or foreign currencies (these are called Forward Contracts and are
discussed below).
- Put and Call Options. The Fund may buy and sell put options
(puts) and call options (calls) on broadly-based stock indices, foreign
currencies or on Stock Index Futures. All options purchased or sold by
the Fund will be traded on a U.S. or foreign commodities exchange or will
result from separate, privately negotiated transactions with a primary
government securities dealer recognized by the Board of Governors of the
Federal Reserve System or with other broker-dealers approved by the Fund's
Board of Directors.
When the Fund writes (that is, sells) a call, it receives cash
(called a premium). The call gives the buyer the ability to buy the
investment on which the call was written from the Fund at the call price
during the period in which the call may be exercised. If the value of the
investment does not rise above the call price, it is likely that the call
will lapse without being exercised, while the Fund keeps the cash premium
(and the investment). Each call the Fund writes must be "covered" while
it is outstanding. That means the Fund must own the investment on which
the call was written or it must own other securities that are acceptable
for the escrow arrangements required for calls. The Fund may write calls
on Futures contracts it owns, but these calls must be covered by
securities or other liquid assets the Fund owns and segregated to enable
it to satisfy its obligations if the call is exercised.
The Fund may purchase and sell put options. Buying a put on an
investment gives the Fund the right to sell the investment at a set price
to a seller of a put on that investment. The Fund can buy only those puts
that relate to broadly-based stock indices, foreign currencies or Stock
Index Futures. The Fund can buy a put on a Stock Index Future whether or
not the Fund owns the particular Stock Index Future in its portfolio. The
Fund may write puts on broadly-based stock indices, foreign currencies or
Stock Index Futures, but only if those puts are covered by segregated
liquid assets.
- Forward Contracts. Forward contracts are foreign currency
exchange contracts. They are used to buy or sell foreign currency for
future delivery at a fixed price. The Fund uses them to try to "lock in"
the U.S. dollar price of a security denominated in a foreign currency that
the Fund has bought or sold, or to protect against possible losses from
changes in the relative values of the U.S. dollar and foreign currency.
The Fund limits its exposure in foreign currency exchange contracts in a
particular foreign currency to the amount of its assets denominated in
that currency or in a closely-correlated currency.
- Hedging instruments can be volatile investments and may involve
special risks. The use of hedging instruments requires special skills and
knowledge of investment techniques that are different than what is
required for normal portfolio management. If the Manager uses a hedging
instrument at the wrong time or judges market conditions incorrectly,
hedging strategies may reduce the Fund's return. The Fund could also
experience losses if the prices of its futures and options positions were
not correlated with its other investments or if it could not close out a
position because of an illiquid market for the future or option.
Options trading involves the payment of premiums and has special tax
effects on the Fund. There are also special risks in particular hedging
strategies. If a covered call written by the Fund is exercised on an
investment that has increased in value, the Fund will be required to sell
the investment at the call price and will not be able to realize any
profit if the investment has increased in value above the call price. In
writing a put, there is a risk that the Fund may be required to buy the
underlying security at a disadvantageous price. The use of forward
contracts may reduce the gain that would otherwise result from a change
in the relationship between the U.S. dollar and a foreign currency. These
risks are described in greater detail in the Statement of Additional
Information.
- Illiquid and Restricted Securities. Under the policies and
procedures established by the Fund's Board of Directors, the Manager
determines the liquidity of certain of the Fund's investments. Investments
may be illiquid because of the absence of an active trading market, making
it difficult to value them or dispose of them promptly at an acceptable
price. A restricted security is one that a contractual restriction on its
resale or which cannot be sold publicly until it is registered under the
Securities Act of 1933. As a matter of fundamental policy, the Fund will
not invest more than 15% of its total assets in illiquid securities.
Notwithstanding the foregoing, to comply with a state's securities laws,
the Fund has agreed to limit investments in restricted securities to 5%
of its total assets, although this restriction is not a fundamental policy
of the Fund. The Fund's percentage limitation on illiquid and restricted
investments does not apply to certain restricted securities that are
eligible for resale to qualified institutional purchasers.
- Loans of Portfolio Securities. To attempt to raise cash for
liquidity purposes, the Fund may lend its portfolio securities to certain
types of eligible borrowers approved by the Board of Directors. Each loan
must be collateralized in accordance with applicable regulatory
requirements. After any loan, the value of the securities loaned is not
expected to exceed 10% of the value of the total assets of the Fund.
Other conditions to which loans are subject are described in the Statement
of Additional Information. There are some risks in connection with
securities lending. The Fund might experience a delay in receiving
additional collateral to secure a loan or a delay in recovery of the
loaned securities.
- Repurchase Agreements. The Fund may enter into repurchase
agreements to generate income for liquidity purposes to meet anticipated
redemptions, or pending the investment of proceeds from sales of Fund
shares or settlement of purchases of portfolio investments. In a
repurchase transaction, the Fund buys a security and simultaneously sells
it to the vendor for delivery at a future date. Repurchase agreements must
be fully collateralized. However, if the vendor fails to pay the resale
price on the delivery date, the Fund may incur costs in disposing of the
collateral and may experience losses if there is any delay in its ability
to do so. Investment in repurchase agreements having a maturity beyond
seven days is subject to the limitations set forth above under "Illiquid
and Restricted Securities." There is no limit on the amount of the Fund's
net assets that may be subject to repurchase agreements of seven days or
less.
- "When-Issued" and Delayed Delivery Transactions. The Fund may
purchase securities on a "when-issued" basis and may purchase or sell
securities on a "delayed delivery" basis or on a "firm commitment" basis.
These terms refer to securities that have been created and for which a
market exists, but which are not available for immediate delivery. The
Fund does not intend to make such purchases for speculative purposes.
During the period between the purchase and settlement, the underlying
securities are subject to market fluctuations and no interest accrues
prior to delivery of the securities.
Other Investment Restrictions. The Fund has other investment
restrictions which are fundamental policies. Under these fundamental
policies, the Fund cannot do any of the following:
- With respect to 75% of its total assets, invest more than 5% of the
value of its total assets in the securities of any one issuer.
- Purchase more than 10% of the voting securities of any one issuer
(this restriction does not apply to U.S. government securities).
- Purchase more than 10% of any class of security of any issuer, with
all outstanding debt securities and all preferred stock of an issuer each
being considered as one class (this restriction does not apply to U.S.
government securities).
- Concentrate its investments in any particular industry, but if deemed
appropriate for attaining its investment objective, the Fund may invest
up to 25% of its total assets (valued at the time of investment) in any
one industry classification used by the Fund for investment purposes (for
this purpose, a foreign government is considered an industry) (this
restriction does not apply to U.S. government securities).
- Borrow money in excess of 33 1/3% of the value of the Fund's total
assets (the Fund may, but has no present intention to, borrow for
leveraging purposes).
- Invest more than 15% of the Fund's total assets in securities of
issuers having a record, together with predecessors, of less than three
years of continuous operation.
- Invest more than 15% of the Fund's total assets in illiquid
securities, including securities for which there is no readily available
market, repurchase agreements which have a maturity of longer than seven
days, securities subject to legal or contractual restrictions and certain
over-the-counter options. Notwithstanding this restriction on illiquid
securities, the Fund may purchase securities which are not registered
under the Securities Act of 1933 (the "1933 Act") but which can be sold
to "qualified institutional buyers" in accordance with Rule 144A under the
1933 Act. Any such security will not be considered illiquid, provided
that the Sub-Adviser, under guidelines established by the Fund's Board of
Directors, determines that an adequate trading market exists for that
security.
The Fund has undertaken, in connection with the qualification of its
shares for sale in certain states, to limit investments in restricted
securities to 5% of its total assets excluding restricted securities that
may be resold to "qualified institutional buyers". This undertaking will
terminate if the Fund ceases to qualify its shares for sale in those
states, or if the applicable state rule or regulations are amended.
All of the percentage restrictions described above and elsewhere in
this Prospectus apply only at the time the Fund purchases a security, and
the Fund need not dispose of a security merely because the size of the
Fund's assets has changed or the security has increased in value relative
to the size of the Fund. There are other fundamental policies discussed
in the Statement of Additional Information.
How the Fund is Managed
Organization and History. The Fund was incorporated in Maryland on
August 6, 1979. The Fund is an open-end, diversified management
investment company.
The Fund is governed by a Board of Directors, which is responsible
for protecting the interests of shareholders under Maryland law. The
Directors meet periodically throughout the year to oversee the Fund's
activities, review its performance, and review the actions of the Manager
and the Sub-Adviser. "Directors and Officers of the Fund" in the
Statement of Additional Information names the Directors and officers of
the Fund and provides more information about them. Although the Fund is
not required by law to hold annual meetings, it may hold shareholder
meetings from time to time on important matters, and shareholders have the
right to call a meeting to remove a Director to take other action
described in the Fund's Articles of Incorporation.
The Board of Directors has the power, without shareholder approval,
to divide unissued shares of the Fund into two or more classes. The Board
has done so, and the Fund currently has three classes of shares, Class A,
Class B and Class C. All classes invest in the same investment portfolio.
Each class has its own dividends and distributions and pays certain
expenses which may be different for the different classes. Each class may
have a different net asset value. Each share has one vote at shareholder
meetings, with fractional shares voting proportionally. Only shares of
a particular class vote as a class on matters that affect that class
alone. Shares are freely transferrable.
The Manager. The Fund is managed by the Manager, OppenheimerFunds,
Inc., which supervises the Fund's investment program and handles its day-
to-day business. The Manager carries out its duties, subject to the
policies established by the Board of Directors, under an Investment
Advisory Agreement with the Fund which states the Manager's
responsibilities. The Agreement sets forth the fees paid by the Fund to
the Manager and describes the expenses that the Fund pays to conduct its
business.
The Manager has operated as an investment adviser since 1959. The
Manager (including a subsidiary) currently manages investment companies,
including other Oppenheimer funds, with assets of more than $40 billion
as of December 31, 1995, and with more than 2.8 million shareholder
accounts. The Manager is owned by Oppenheimer Acquisition Corp., a
holding company that is owned in part by senior officers of the Manager
and controlled by Massachusetts Mutual Life Insurance Company.
The Sub-Adviser. The Manager has retained OpCap Advisors, the Sub-
Adviser, to provide day-to-day portfolio management of the Fund. The Sub-
Adviser is a majority-owned subsidiary of Oppenheimer Capital, a
registered investment advisor, whose employees perform all investment
advisory services provided to the Fund by the Sub-Adviser. Oppenheimer
Financial Corp., a holding company, holds a 33% interest in Oppenheimer
Capital, a registered investment adviser. Oppenheimer Capital, L.P., a
Delaware limited partnership whose units are traded on the New York Stock
Exchange and of which Oppenheimer Financial Corp. is the sole general
partner, owns the remaining 67% interest. Oppenheimer Capital has operated
as an investment advisor since 1968.
Prior to November 22, 1995, OpCap Advisors was named Quest for Value
Advisors and was the investment adviser to the Fund. Effective as of such
date, the Manager acquired the investment advisory and other contracts and
business relationships and certain assets and liabilities of Quest for
Value Advisors, Quest for Value Distributors and Oppenheimer Capital
relating to twelve Quest for Value mutual funds, including the Fund.
Pursuant to this acquisition and Fund shareholder approval received on
November 3, 1995, the Fund entered into the following agreements on
November 22, 1995: the Investment Advisory Agreement between the Fund and
the Manager, and the distribution and service plans and agreements between
the Fund and the Distributor. Further, the Manager entered into a
subadvisory agreement with the Sub-Adviser for the benefit of the Fund.
These agreements are described below.
- Portfolio Manager. The Fund's portfolio manager, Ms. Eileen
Rominger, is employed by the Sub-Adviser and is primarily responsible for
the selection of the Fund's securities. Ms. Rominger, who is also a
Managing Director of Oppenheimer Capital, has been portfolio manager of
the Fund since 1988 and has been an analyst and portfolio manager at
Oppenheimer Capital since 1981.
The Sub-Adviser's equity investment policy is overseen by George
Long, Managing Director and Chief Investment Officer for Oppenheimer
Capital, the parent of the Sub-Adviser. Mr. Long has been with
Oppenheimer Capital since 1981.
- Fees and Expenses. Under the Investment Advisory Agreement, the
Fund pays the Manager the following annual fees, which decline on
additional assets as the Fund grows: 1.00% of the first $400 million of
average net assets, 0.90% of the next $400 million, and 0.85% of net
assets in excess of $800 million. This management fee is higher than that
paid by most other investment companies. The Fund pays expenses related
to its daily operations, such as custodian fees, Trustees' fees, transfer
agency fees, legal and auditing costs; the Fund also reimburses the
Manager for bookkeeping and accounting services performed on behalf of the
Fund. Those expenses are paid out of the Fund's assets and are not paid
directly by shareholders. However, those expenses reduce the net asset
value of shares, and therefore are indirectly borne by shareholders
through their investment. More information about the investment advisory
agreement and the other expenses paid by the Fund is contained in the
Statement of Additional Information.
The Manager will pay the Sub-Adviser an annual fee based on the
average daily net assets of the Fund equal to 40% of the advisory fee
collected by the Manager based on the total net assets of the Fund as of
November 22, 1995 (the "Base Amount") plus 30% of the investment advisory
fee collected by the Manager based on the total net assets of the Fund
that exceed the Base Amount.
The Sub-Adviser may select its affiliate Oppenheimer & Co., Inc.
("Opco"), a registered broker-dealer to execute transactions for the
Funds, provided that the commissions, fees or other remuneration received
by Opco are reasonable and fair compared to those paid to other brokers
in connection with comparable transactions. When selecting broker-dealers
other than Opco, the Sub-Adviser may consider their record of sales of
shares of the Funds. Further information about the Fund's brokerage
policies and practices are set forth in "Brokerage Policies of the Fund"
in the Statement of Additional Information.
- The Distributor. The Fund's shares are sold through dealers and
brokers that have a sales agreement with OppenheimerFunds Distributor,
Inc., a subsidiary of the Manager that acts as the Fund's Distributor.
The Distributor also distributes the shares of the other Oppenheimer funds
managed by the Manager and is sub-distributor for funds managed by a
subsidiary of the Manager.
- The Transfer Agent. The Fund's transfer agent is
OppenheimerFunds Services, a division of the Manager, which acts as the
shareholder servicing agent for the Fund. It also acts as the shareholder
servicing agent for certain other Oppenheimer funds. Shareholders should
direct inquiries about their accounts to the Transfer Agent at the address
and toll-free number shown below in this Prospectus and on the back
cover.
Performance of the Fund
Explanation of Performance Terminology. The Fund uses the terms "total
return" and "average annual total return" to illustrate its performance.
The performance of each class of shares is shown separately, because the
performance of each class will usually be different as a result of the
different kinds of expenses each class bears. These returns measure the
performance of a hypothetical account in the Fund over various periods,
and do not show the performance of each shareholder's account (which will
vary if dividends are received in cash, or shares are sold or purchased).
The Fund's performance information may help you see how well your
investment in the Fund has done over time and to compare it to other funds
or market indices, as we have done below.
It is important to understand that the Fund's total returns
represent past performance and should not be considered to be predictions
of future returns or performance. This performance data is described
below, but more detailed information about how total returns are
calculated is contained in the Statement of Additional Information, which
also contains information about other ways to measure and compare the
Fund's performance. The Fund's investment performance will vary over time,
depending on market conditions, the composition of the portfolio, expenses
and which class of shares you purchase.
- Total Returns. There are different types of total returns used
to measure the Fund's performance. Total return is the change in value
of a hypothetical investment in the Fund over a given period, assuming
that all dividends and capital gains distributions are reinvested in
additional shares. The cumulative total return measures the change in
value over the entire period (for example, ten years). An average annual
total return shows the average rate of return for each year in a period
that would produce the cumulative total return over the entire period.
However, average annual total returns do not show the Fund's actual year-
by-year performance.
When total returns are quoted for Class A shares, they reflect the
payment of the current maximum initial sales charge. When total returns
are shown for Class B shares, they reflect the effect of the contingent
deferred sales charge that applies to the period for which total return
is shown. When total returns are shown for a one-year period (or less)
for Class C shares, they reflect the effect of the contingent deferred
sales charge. Total returns may also be quoted at net asset value,
without including the sales charge, and those returns would be reduced if
sales charges were deducted.
How Has the Fund Performed? Below is a discussion by the Manager of the
Fund's performance during its last fiscal year ended October 31, 1995,
followed by a graphical comparison of the Fund's performance to an
appropriate broad-based stock market index.
- Management's Discussion of Performance. During the fiscal year
ended October 31, 1995, the domestic stock market reached record highs.
The Fund remained virtually fully invested in equity securities during
this time and participated in the stock market's strong performance.
During the fiscal year, the Sub-Adviser sought reasonably priced
investments in companies with above-average returns that were in strong
competitive positions. Using this investment approach, during the past
fiscal year, the Sub-Adviser invested a portion of the Fund's assets in
companies engaged in banking, insurance and other financial services, a
strong market sector during the year. These securities contributed
greatly to gains achieved by the Fund. During the year the Fund
maintained an above-average cash position resulting from profit taking on
certain stocks and the Sub-Adviser's determination to not reinvest the
cash in view of high market valuations.
- Comparing the Fund's Performance to the Market. The graphs below
show the performance of a hypothetical $10,000 investment in Class A,
Class B and Class C shares of the Fund held until October 31, 1995. In
the case of Class A shares, performance is measured since commencement of
operations (April 30, 1980) and in the case of Class B and Class C shares,
performance is measured from the inception of the class on (September 2,
1993).
The Fund's performance is compared to the performance of the S&P 500
Index, a broad-based index of equity securities widely regarded as a
general measurement of the performance of the U.S. equity securities
market. Index performance reflects the reinvestment of dividends but does
not consider the effect of capital gains or transaction costs, and none
of the data below shows the effect of taxes. The Fund's performance
reflects the reinvestment of all dividends and capital gains
distributions, and the effect of Fund business and operating expenses.
While index comparisons may be useful to provide a benchmark for the
Fund's performance, it must be noted that the Fund's investments are not
limited to the securities in the S&P 500 Index. Moreover, the index
performance data does not reflect any assessment of the risk of the
investments included in the index.
Oppenheimer Quest Value Fund, Inc.
Comparison of Change in Value
of $10,000 Hypothetical Investments
in Oppenheimer Quest Value Fund, Inc. and
the S&P 500 Index
(Graph)
Past performance is not predictive of future performance.
Average Annual Total Returns
of the Fund at 10/31/95
Class A Shares(1)
1-Year 5-Years 10-Years
17.57 % 17.76% 12.54%
Class B Shares(2)
1-Year Life
19.08% 10.87%
Class C Shares (2)
1-Year Life
23.10% 12.06%
_____________________
The average annual total returns and the ending account value in the graph
reflect reinvestment of all dividends and capital gains distributions.
(1) The commencement of operations of the Fund (Class A shares) was
4/30/80. Class A returns are shown net of the current applicable 5.75%
maximum initial sales charge.
(2) Class B shares and Class C of the Fund were first publicly offered on
9/02/93. The average annual total returns reflect reinvestment of all
dividends and capital gains distributions and as to Class B shares are
shown net of the applicable 5% and 3% contingent deferred sales charges,
respectively, for the 1-year period and life-of-the-class. As to Class
C shares, average annual total returns are shown net of the applicable 1%
contingent deferred sales charge for the 1-year period; after one year,
such sales charge is not applicable. The ending account for Class B
shares value in the graph is net of the applicable 3% contingent deferred
sales charge.
ABOUT YOUR ACCOUNT
How to Buy Shares
Classes of Shares. The Fund offers investors three different classes of
shares. The different classes of shares represent investments in the same
portfolio of securities but are subject to different expenses and will
likely have different share prices.
- Class A Shares. If you buy Class A shares, you may pay an initial
sales charge on investments up to $1 million (up to $500,000 for purchases
by OppenheimerFunds prototype 401(k) plans). If you purchase Class A
shares as part of an investment of at least $1 million ($500,000 for
OppenheimerFunds prototype 401(k) plans) in shares of one or more
Oppenheimer funds or Former Quest for Value Funds (as defined below), you
will not pay an initial sales charge, but if you sell any of those shares
within 12, 18 or 24 months of buying them, you may pay a contingent
deferred sales charge in an amount that depends upon when you bought such
shares. The amount of that sales charge will vary depending on the amount
you invested. Sales charges are described in "Buying Class A Shares"
below.
- Class B Shares. If you buy Class B shares, you pay no sales
charge at the time of purchase, but if you sell your shares within six
years you will normally pay a contingent deferred sales charge that
varies, depending on how long you have owned your shares. It is described
in "Buying Class B Shares" below.
- Class C Shares. When you buy Class C shares, you pay no sales
charge at the time of purchase, but if you sell your shares within 12
months of buying them, you will normally pay a contingent deferred sales
charge of 1%. It is described in "Buying Class C Shares" below.
Which Class of Shares Should You Choose? Once you decide that the Fund
is an appropriate investment for you, the decision as to which class of
shares is better suited to your needs depends on a number of factors which
you should discuss with your financial advisor. The Fund's operating
costs that apply to a class of shares and the effect of the different
types of sales charges on your investment will vary your investment
results over time. The most important factors are how much you plan to
invest, how long you plan to hold your investment, and whether you
anticipate exchanging your shares for shares of other Oppenheimer funds
(not all of which currently offer Class B and Class C shares). If your
goals and objectives change over time and you plan to purchase additional
shares, you should re-evaluate those factors to see if you should consider
another class of shares.
In the following discussion, to help provide you and your financial
advisor with a framework in which to choose a class, we have made some
assumptions using a hypothetical investment in the Fund. We used the
sales charge rates that apply to each class, and considered the effect of
the asset-based sales charges on Class B and Class C expenses (which will
affect your investment return). For the sake of comparison, we have
assumed that there is a 10% rate of appreciation in the investment each
year. Of course, the actual performance of your investment cannot be
predicted and will vary, based on the Fund's actual investment returns and
the operating expenses borne by each class of shares, and which class you
invest in.
The factors discussed below are not intended to be investment advice
or recommendations, because each investor's financial considerations are
different. The discussion below of the factors to consider in purchasing
a particular class of shares assumes that you will purchase only one class
of shares and not a combination of shares of different classes.
- How Long Do You Expect to Hold Your Investment? While future
financial needs cannot be predicted with certainty, knowing how long you
expect to hold your investment will assist you in selecting the
appropriate class of shares. Because of the effect of class-based
expenses, your choice will also depend on how much you plan to invest.
For example, the reduced sales charges available for larger purchases of
Class A shares may, over time, offset the effect of paying an initial
sales charge on your investment (which reduces the amount of your
investment dollars used to buy shares for your account), compared to the
effect over time of higher class-based expenses on Class B or Class C
shares for which no initial sales charge is paid.
Investing for the Short Term. If you have a short-term investment
horizon (that is, you plan to hold your shares for not more than six
years), you should probably consider purchasing Class A or Class C shares
rather than Class B shares, because of the effect of the Class B
contingent deferred sales charge if you redeem within 6 years, as well as
the effect of the Class B asset-based sales charge on the investment
return for that class in the short-term. Class C shares might be the
appropriate choice (especially for investments of less than $100,000),
because there is no initial sales charge on Class C Shares, and the
contingent deferred sales charge does not apply to amounts you sell after
holding them one year.
However, if you plan to invest more than $100,000 for the shorter
term, then the more you invest and the more your investment horizon
increases toward six years, Class C shares might not be as advantageous
as Class A shares. That is because the annual asset-based sales charge
on Class C shares will have a greater impact on your account over the
longer term than the reduced front-end sales charge available for larger
purchases of Class A shares. For example, Class A might be more
advantageous than Class C (as well as Class B) for investments of more
than $100,000 expected to be held for 5 or 6 years (or more). For
investments over $250,000 expected to be held 4 to 6 years (or more),
Class A shares may become more advantageous than Class C (and B). If
investing $500,000 or more, Class A may be more advantageous as your
investment horizon approaches 3 years or more.
And for most investors who invest $1 million or more, in most cases
Class A shares will be the most advantageous choice, no matter how long
you intend to hold your shares. For that reason, the Distributor normally
will not accept purchase orders of $500,000 or $1 million or more of Class
B or Class C shares respectively from a single investor.
Investing for the Longer Term. If you are investing for the longer
term, for example, for retirement, and do not expect to need access to
your money for seven years or more, Class B shares may be an appropriate
consideration, if you plan to invest less than $100,000. If you plan to
invest more than $100,000 over the long term, Class A shares will likely
be more advantageous than Class B shares or Class C shares, as discussed
above, because of the effect of the expected lower expenses for class A
shares and the reduced initial sales charges available for larger
investments in Class A shares under the Funds' Right of Accumulation.
Of course, these examples are based on approximations of the effect
of current sales charges and expenses on a hypothetical investment over
time, using the assumed annual performance return stated above, and
therefore should not be relied on as rigid guidelines.
- Are There Differences in Account Features That Matter to You?
Because some account features may not be available for Class B or Class
C shareholders, you should carefully review how you plan to use your
investment account before deciding which class of shares is better for
you. For example, share certificates are not available for Class B or
Class C shares, and if you are considering using your shares as collateral
for a loan, that may be a factor to consider. Additionally, dividends
payable to Class B and Class C shareholders will be reduced by the
additional expenses borne solely by those classes, such as the asset-based
sales charges described below and in the Statement of Additional
Information.
- How Does It Affect Payments to My Broker? A salesperson, such as
a broker, or any other person who is entitled to receive compensation for
selling Fund shares may receive different compensation for selling one
class rather than another class. It is important that investors
understand that the purpose of the contingent deferred sales charges and
asset-based sales charges for Class B and Class C shares are the same as
the purpose of the front-end sales charge on sales of Class A shares: to
compensate the Distributor for commissions it pays to dealers and
financial institutions for selling shares.
How Much Must You Invest? You can open a Fund account with a minimum
initial investment of $1,000 and make additional investments at any time
with as little as $25. There are reduced minimum investments under special
investment plans:
With Asset Builder Plans, Automatic Exchange Plans, 403(b)(7)
custodial plans and military allotment plans, you can make initial and
subsequent investments of as little as $25; and subsequent purchases of
at least $25 can be made by telephone through AccountLink.
Under pension and profit-sharing plans and Individual Retirement
Accounts (IRAs), you can make an initial investment of as little as $250
(if your IRA is established under an Asset Builder Plan, the $25 minimum
applies), and subsequent investments may be as little as $25.
There is no minimum investment requirement if you are buying shares
by reinvesting dividends from the Fund or other OppenheimerFunds (a list
of them appears in the Statement of Additional Information, or you can ask
your dealer or call the Transfer Agent), or by reinvesting distributions
from unit investment trusts that have made arrangements with the
Distributor.
- How Are Shares Purchased? You can buy shares several ways: through
any dealer, broker or financial institution that has a sales agreement
with the Distributor, directly through the Distributor, or automatically
from your bank account through an Asset Builder Plan under the
OppenheimerFunds AccountLink service. When you buy shares, be sure to
specify Class A, Class B or Class C shares. If you do not choose, your
investment will be made in Class A shares.
- Buying Shares Through Your Dealer. Your dealer will place your
order with the Distributor on your behalf.
- Buying Shares Through the Distributor. Complete an
OppenheimerFunds New Account Application and return it with a check
payable to "OppenheimerFunds Distributor, Inc." Mail it to P.O. Box 5270,
Denver, Colorado 80217. If you don't list a dealer on the application,
the Distributor will act as your agent in buying the shares. However, we
recommend that you discuss your investment first with a financial advisor,
to be sure it is appropriate for you.
- Buying Shares Through OppenheimerFunds AccountLink. You can use
AccountLink to link your Fund account with an account at a U.S. bank or
other financial institution that is an Automated Clearing House (ACH)
member, to transmit funds electronically to purchase shares, to have the
Transfer Agent send redemption proceeds, or to transmit dividends and
distributions.
Shares are purchased for your account on the regular business day
the Distributor is instructed by you to initiate the ACH transfer to buy
shares. You can provide those instructions automatically, under an Asset
Builder Plan, described below, or by telephone instructions using
OppenheimerFunds PhoneLink, also described below. You should request
AccountLink privileges on the application or dealer settlement
instructions used to establish your account. Please refer to "AccountLink"
below for more details.
- Asset Builder Plans. You may purchase shares of the Fund (and up
to four other Oppenheimer funds) automatically each month from your
account at a bank or other financial institution under an Asset Builder
Plan with AccountLink. Details are on the Application and in the Statement
of Additional Information.
- At What Price Are Shares Sold? Shares are sold at the public
offering price based on the net asset value (and any initial sales charge
that applies) that is next determined after the Distributor receives the
purchase order in Denver. In most cases, to enable you to receive that
day's offering price, the Distributor must receive your order by the time
of day the New York Stock Exchange closes, which is normally 4:00 P.M.,
New York time, but may be earlier on some days (all references to time in
this Prospectus mean "New York time"). The net asset value of each class
of shares is determined as of that time on each day the New York Stock
Exchange is open (which is a "regular business day").
If you buy shares through a dealer, the dealer must receive your
order by the regular close of business of the New York Stock Exchange on
a regular business day and transmit it to the Distributor so that it is
received before the Distributor's close of business that day, which is
normally 5:00 P.M. The Distributor may reject any purchase order for the
Fund's shares, in its sole discretion.
Special Sales Charge Arrangements for Certain Persons. Appendix A to
this Prospectus sets forth conditions for the waiver of, or exemption
from, sales charges or the special sales charge rates that apply to
shareholders of the Former Quest for Value Funds (as defined in that
Appendix), including the Fund.
Buying Class A Shares. Class A shares are sold at their offering price,
which is normally net asset value plus an initial sales charge. However,
in some cases, described below, where purchases are not subject to an
initial sales charge, the offering price may be net asset value. In some
cases, reduced sales charges may be available, as described below. Out
of the amount you invest, the Fund receives the net asset value to invest
for your account. The sales charge varies depending on the amount of your
purchase. A portion of the sales charge may be retained by the
Distributor and allocated to your dealer as commission. The current sales
charge rates and commissions paid to dealers and brokers are as follows:
- -------------------------------------------------------------------------
Front-End Sales Charge Commission
As a Percentage of as Percentage
Offering Amount of Offering
Amount of Purchase Price Invested Price
- ------------------------------------------------------------------------
Less than $25,000 5.75% 6.10% 4.75%
$25,000 or more but
less than $50,000 5.50% 5.82% 4.75%
$50,000 or more but
less than $100,000 4.75% 4.99% 4.00%
$100,000 or more but
less than $250,000 3.75% 3.90% 3.00%
$250,000 or more but
less than $500,000 2.50% 2.56% 2.00%
$500,000 or more but
less than $1 million 2.00% 2.04% 1.60%
The Distributor reserves the right to reallow the entire commission to
dealers. If that occurs, the dealer may be considered an "underwriter"
under Federal securities laws.
- Class A Contingent Deferred Sales Charge. There is no initial
sales charge on purchases of Class A shares of any one or more of the
Oppenheimer funds in the following cases:
- Purchases aggregating $1 million or more, or
- Purchases by an Oppenheimer funds prototype 401(k) plan that: (1)
buys shares costing $500,000 or more, or (2) has, at the time of
purchase, 100 or more eligible participants, or (3) certifies that it
projects to have annual plan purchases of $200,000 or more.
Shares of any of the OppenheimerFunds that offer only one class of
shares that has no designation are considered "Class A shares" for this
purpose. The Distributor pays dealers of record commissions on those
purchases in an amount equal to the sum of 1.0% of the first $2.5 million,
plus 0.50% of the next $2.5 million, plus 0.25% of purchases over $5
million. That commission will be paid only on the amount of those
purchases in excess of $1 million ($500,000 for purchases by
OppenheimerFunds 401(k) prototype plans) that were not previously subject
to a front-end sales charge and dealer commission.
If you redeem any of those shares within 18 months of the end of the
calendar month of their purchase, a contingent deferred sales charge
(called the "Class A contingent deferred sales charge") will be deducted
from the redemption proceeds. That sales charge will be equal to 1.0% of
(1) the aggregate net asset value of the redeemed shares (not including
shares purchased by reinvestment of dividends or capital gain
distributions) or (2) the original cost of the shares, whichever is less.
However, the Class A contingent deferred sales charge will not exceed the
aggregate commissions the Distributor paid to your dealer on all Class A
shares of all Oppenheimer funds you purchased subject to the Class A
contingent deferred sales charge. Class A shares of the Fund purchased
without a contingent deferred sales charge on or prior to the date of this
Prospectus will be subject to a contingent deferred sales charge at the
applicable rate set forth in Appendix A to this Prospectus.
In determining whether a contingent deferred sales charge is payable,
the Fund will first redeem shares that are not subject to the sales
charge, including shares purchased by reinvestment of dividends and
capital gains, and then will redeem other shares in the order that you
purchased them. The Class A contingent deferred sales charge is waived
in certain cases described in "Waivers of Class A Sales Charges" below.
No Class A contingent deferred sales charge is charged on exchanges
of shares under the Fund's exchange privilege (described below). However,
if the shares acquired by exchange are redeemed within 12, 18 or 24 months
of the end of the calendar month of the purchase of the exchanged shares,
depending upon the date of purchase, the sales charge will apply.
- Special Arrangements With Dealers. The Distributor may advance up
to 13 months' commissions to dealers that have established special
arrangements with the Distributor for Asset Builder Plans for their
clients. Dealers whose sales of Class A shares of OppenheimerFunds (other
than money market funds) under OppenheimerFunds-sponsored 403(b)(7)
custodial plans exceed $5 million per year (calculated per quarter), will
receive monthly one-half of the Distributor's retained commissions on
those sales, and if those sales exceed $10 million per year, those dealers
will receive the Distributor's entire retained commission on those sales.
Reduced Sales Charges for Class A Share Purchases. You may be eligible
to buy Class A shares at reduced sales charge rates in one or more of the
following ways:
- Right of Accumulation. To qualify for the lower sales charge rates
that apply to larger purchases of Class A shares, you and your spouse can
add together Class A and Class B shares you purchase for your individual
accounts, or jointly, or for trust or custodial accounts on behalf of your
children who are minors. A fiduciary can cumulate shares purchased for
a trust, estate or other fiduciary account (including one or more employee
benefit plans of the same employer) that has multiple accounts.
Additionally, you can add together current purchases of Class A and
Class B shares of the Fund and other Oppenheimer funds to reduce the sales
charge rate that applies to current purchases of Class A shares. You can
also count Class A and Class B shares of Oppenheimer funds you previously
purchased subject to an initial or contingent deferred sales charge to
reduce the sales charge rate for current purchases of Class A shares,
provided that you still hold that investment in one of the Oppenheimer
funds. The value of those shares will be based on the greater of the
amount you paid for the shares or their current value (at offering price).
The Oppenheimer funds are listed in "Reduced Sales Charges" in the
Statement of Additional Information, or a list can be obtained from the
Transfer Agent. The reduced sales charge will apply only to current
purchases and must be requested when you buy your shares.
- Letter of Intent. Under a Letter of Intent, if you purchase Class
A shares or Class A and Class B shares of the Fund and other Oppenheimer
funds during a 13-month period, you can reduce the sales charge rate that
applies to your purchases of Class A shares. The total amount of your
intended purchases of both Class A and Class B shares will determine the
reduced sales charge rate for the Class A shares purchased during that
period. This can include purchases made up to 90 days before the date of
the Letter. More information is contained in the Application and in
"Reduced Sales Charges" in the Statement of Additional Information.
- Waivers of Class A Sales Charges. The Class A sales charges are
not imposed in the circumstances described below. There is an explanation
of this policy in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers of Initial and Contingent Deferred Sales Charges for Certain
Purchasers. Class A shares purchased by the following investors are not
subject to any Class A sales charges:
- the Manager or its affiliates;
- present or former officers, directors, trustees and employees (and
their "immediate families" as defined in "Reduced Sales Charges" in the
Statement of Additional Information) of the Fund, the Manager and its
affiliates, and retirement plans established by them for their employees;
- registered management investment companies, or separate accounts
of insurance companies having an agreement with the Manager or the
Distributor for that purpose;
- dealers or brokers that have a sales agreement with the
Distributor, if they purchase shares for their own accounts or for
retirement plans for their employees;
- employees and registered representatives (and their spouses) of
dealers or brokers described above or financial institutions that have
entered into sales arrangements with such dealers or brokers (and are
identified to the Distributor) or with the Distributor; the purchaser must
certify to the Distributor at the time of purchase that the purchase is
for the purchaser's own account (or for the benefit of such employee's
spouse or minor children);
- dealers, brokers or registered investment advisers that have
entered into an agreement with the Distributor (1) providing specifically
for the use of shares of the Fund in particular investment products made
available to their clients (those clients may be charged a transaction fee
by their dealer, broker or adviser for the purchase or sale of Fund
shares) or (2) to sell shares to defined contribution employee retirement
plans for which the dealer, broker or investment adviser provides
administrative services;
- directors, trustees, officers or full time employees of OpCap
Advisors or its affiliates, their relatives or any trust, pension, profit
sharing or other benefit plan which beneficially owns shares for those
persons;
- accounts for which Oppenheimer Capital is the investment adviser
(the Distributor must be advised of this arrangement) and persons who are
directors or trustees of the company or trust which is the beneficial
owner of such accounts;
- any unit investment trust that has entered into an appropriate
agreement with the Distributor;
- a TRAC-2000 401(k) plan (sponsored by the former Quest for Value
Advisors) whose Class B or Class C shares of a Former Quest for Value Fund
were exchanged for Class A shares of that Fund due to the termination of
the Class B and Class C TRAC-2000 program on November 24, 1995; or
- qualified retirement plans that had agreed with the former Quest
for Value Advisors to purchase shares of any of the Former Quest for Value
Funds at net asset value, with such shares to be held through DCXchange,
a sub-transfer agency mutual fund clearinghouse, provided that such
arrangements are consummated and share purchases commence by March 31,
1996.
Waivers of Initial and Contingent Deferred Sales Charges in Certain
Transactions. Class A shares issued or purchased in the following
transactions are not subject to Class A sales charges:
- shares issued in plans of reorganization, such as mergers, asset
acquisitions and exchange offers, to which the Fund is a party;
- shares purchased by the reinvestment of loan repayments by a
participant in a retirement plan for which the Manager or its affiliates
acts as sponsor;
- shares purchased by the reinvestment of dividends or other
distributions reinvested from the Fund or other Oppenheimer funds (other
than Oppenheimer Cash Reserves) or unit investment trusts for which
reinvestment arrangements have been made with the Distributor;
- shares purchased and paid for with the proceeds of shares redeemed
in the prior 12 months from a mutual fund (other than a fund managed by
the Manager or any of its subsidiaries) on which an initial sales charge
or contingent deferred sales charge was paid (this waiver also applies to
shares purchased by exchange of shares of Oppenheimer Money Market Fund,
Inc. that were purchased and paid for in this manner); this waiver must
be requested when the purchase order is placed for your shares of the
Fund, and the Distributor may require evidence of your qualification for
this waiver; or
- shares purchased with the proceeds of maturing principal of units
of any Qualified Unit Investment Liquid Trust Series.
Waivers of the Class A Contingent Deferred Sales Charge for Certain
Redemptions. The Class A contingent deferred sales charge does not apply
to purchases of Class A shares at net asset value without sales charge as
described in the two sections above. It is also waived if shares that
would otherwise be subject to the contingent deferred sales charge are
redeemed in the following cases:
- for retirement distributions or loans to participants or
beneficiaries from qualified retirement plans, deferred compensation plans
or other employee benefit plans, including OppenheimerFunds prototype
401(k) plans (these are all referred to as "Retirement Plans");
- to return excess contributions made to Retirement Plans;
- to make Automatic Withdrawal Plan payments that are limited
annually to no more than 12% of the original account value;
- involuntary redemptions of shares by operation of law or
involuntary redemptions of small accounts (see "Shareholder Account Rules
and Policies," below);
- if, at the time a purchase order is placed for Class A shares that
would otherwise be subject to the Class A contingent deferred sales
charge, the dealer agrees to accept the dealer's portion of the commission
payable on the sale in installments of 1/18th of the commission per month
(and no further commission will be payable if the shares are redeemed
within 18 months of purchase); or
- for distributions from OppenheimerFunds prototype 401(k) plans for
any of the following cases or purposes: (1) following the death or
disability (as defined in the Internal Revenue Code) of the participant
or beneficiary (the death or disability must occur after the participant's
account was established); (2) hardship withdrawals, as defined in the
plan; (3) under a Qualified Domestic Relations Order, as defined in the
Internal Revenue Code; (4) to meet the minimum distribution requirements
of the Internal Revenue Code; (5) to establish "substantially equal
periodic payments" as described in Section 72(t) of the Internal Revenue
Code, or (6) separation from service.
- Distribution and Service Plan for Class A Shares. The Fund has
adopted a Distribution and Service Plan for Class A shares to reimburse
the Distributor for a portion of its costs incurred in connection with the
personal service and maintenance of shareholder accounts that hold Class
A shares. Under the Plan, the Fund pays an annual asset-based sales
charge to the Distributor of 0.25% of the average annual net assets of the
class. The Fund also pays a service fee to the Distributor of 0.25% of
the average annual net assets of the class. The Distributor uses all of
the service fee and a portion of the asset-based sales charge (equal to
0.15% annually for Class A shares purchased prior to September 1, 1993 and
0.10% for Class A shares purchased on or after September 1, 1993) to
compensate dealers, brokers, banks and other financial institutions
quarterly for providing personal service and maintenance of accounts of
their customers that hold Class A shares. The Distributor retains the
balance of the asset-based sales charge to reimburse itself for its other
expenditures under the Plan.
Services to be provided include, among others, answering customer
inquiries about the Fund, assisting in establishing and maintaining
accounts in the Fund, making the Fund's investment plans available and
providing other services at the request of the Fund or the Distributor.
Payments are made by the Distributor quarterly at an annual rate not to
exceed 0.25% of the average annual net assets of Class A shares held in
accounts of the dealer or its customers. The payments under the Plan
increase the annual expenses of Class A shares. For more details, please
refer to "Distribution and Service Plans" in the Statement of Additional
Information.
Buying Class B Shares. Class B shares are sold at net asset value per
share without an initial sales charge. However, if Class B shares are
redeemed within 6 years of their purchase, a contingent deferred sales
charge will be deducted from the redemption proceeds. That sales charge
will not apply to shares purchased by the reinvestment of dividends or
capital gains distributions. The charge will be assessed on the lesser of
the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price. The Class B contingent
deferred sales charge is paid to the Distributor to reimburse its expenses
of providing distribution-related services to the Fund in connection with
the sale of Class B shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 6 years, and (3) shares held the longest during the
6-year period.
The amount of the contingent deferred sales charge will depend on the
number of years since you invested and the dollar amount being redeemed,
according to the following schedule:
Years Since Contingent Deferred Sales Charge
Beginning of Month In Which on Redemptions in that Year
Purchase Order was Accepted (As % of Amount Subject to Charge)
0 - 1 5.0%
1 - 2 4.0%
2 - 3 3.0%
3 - 4 3.0%
4 - 5 2.0%
5 - 6 1.0%
6 and following None
In the table, a "year" is a 12-month period. All purchases are considered
to have been made on the first regular business day of the month in which
the purchase was made.
- Automatic Conversion of Class B Shares. Six years after you
purchase Class B shares, those shares will automatically convert to Class
A shares. This conversion feature relieves Class B shareholders of the
asset-based sales charge that applies to Class B shares under the Class
B Distribution Plan, described below. The conversion is based on the
relative net asset value of the two classes, and no sales load or other
charge is imposed. When Class B shares convert, any other Class B shares
that were acquired by the reinvestment of dividends and distributions on
the converted shares will also convert to Class A shares. The conversion
feature is subject to the continued availability of a tax ruling described
in "Alternative Sales Arrangements - Class A, Class B and Class C Shares"
in the Statement of Additional Information.
- Distribution and Service Plan for Class B Shares. The Fund has
adopted a Distribution and Service Plan for Class B shares to compensate
the Distributor for distributing Class B shares and servicing accounts.
Under the Plan, the Fund pays the Distributor an annual "asset-based sales
charge" of 0.75% per year on Class B shares that are outstanding for 6
years or less. The Distributor also receives a service fee of 0.25% per
year. Both fees are computed on the average annual net assets of Class
B shares, determined as of the close of each regular business day. The
asset-based sales charge allows investors to buy Class B shares without
a front-end sales charge while allowing the Distributor to compensate
dealers that sell Class B shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class B shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fee increase
Class B expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class B shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 3.75% of the
purchase price to dealers from its own resources at the time of sale.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class B shares.
Those payments, retained by the Distributor, are at a fixed rate which is
not related to the Distributor's expenses. The services rendered by the
Distributor include paying and financing the payment of sales commissions,
service fees, and other costs of distributing and selling Class B shares.
If the Plan is terminated by the Fund, the Board of Directors may allow
the Fund to continue payments of the service fee and/or asset-based sales
charge to the Distributor for distributing Class B shares before the Plan
was terminated.
- Waivers of Class B Sales Charges. The Class B contingent deferred
sales charge will not apply to shares purchased in certain types of
transactions, nor will it apply to shares redeemed in certain
circumstances, as described below under "Waivers of Class B and Class C
Sales Charges."
Buying Class C Shares. Class C shares are sold at net asset value per
share without an initial sales charge. However, if Class C shares are
redeemed within 12 months of their purchase, a contingent deferred sales
charge of 1.0% will be deducted from the redemption proceeds. That sales
charge will not apply to shares purchased by the reinvestment of dividends
or capital gains distributions. The charge will be assessed on the lesser
of the net asset value of the shares at the time of redemption or the
original purchase price. The contingent deferred sales charge is not
imposed on the amount of your account value represented by the increase
in net asset value over the initial purchase price (including increases
due to the reinvestment of dividends and capital gains distributions). The
Class C contingent deferred sales charge is paid to the Distributor to
reimburse its expenses of providing distribution-related services to the
Fund in connection with the sale of Class C shares.
To determine whether the contingent deferred sales charge applies to
a redemption, the Fund redeems shares in the following order: (1) shares
acquired by reinvestment of dividends and capital gains distributions, (2)
shares held for over 12 months, and (3) shares held the longest during the
12-month period.
- Distribution and Service Plan for Class C Shares. The Fund has
adopted a Distribution and Service Plan for Class C shares to compensate
the Distributor for distributing Class C shares and servicing accounts.
Under the Plan, the Fund pays the Distributor an annual "asset-based sales
charge" of 0.75% per year on Class C shares. The Distributor also
receives a service fee of 0.25% per year. Both fees are computed on the
average annual net assets of Class C shares, determined as of the close
of each regular business day. The asset-based sales charge allows
investors to buy Class C shares without a front-end sales charge while
allowing the Distributor to compensate dealers that sell Class C shares.
The Distributor uses the service fee to compensate dealers for
providing personal services for accounts that hold Class C shares. Those
services are similar to those provided under the Class A Service Plan,
described above. The asset-based sales charge and service fees increase
Class C expenses by 1.00% of average net assets per year.
The Distributor pays the 0.25% service fee to dealers in advance for
the first year after Class C shares have been sold by the dealer. After
the shares have been held for a year, the Distributor pays the fee on a
quarterly basis. The Distributor pays sales commissions of 0.75% of the
purchase price to dealers from its own resources at the time of sale. The
total up-front commission paid by the Distributor to the dealer at the
time of sale of Class C shares is 1.00% of the purchase price. The
Distributor plans to pay the asset-based sales charge as an ongoing
commission to the dealer on Class C shares that have been outstanding for
a year or more.
The Fund pays the asset-based sales charge to the Distributor for its
services rendered in connection with the distribution of Class C shares.
Those payments are at a fixed rate which is not related to the
Distributor's expenses. The services rendered by the Distributor include
paying and financing the payment of sales commissions, service fees, and
other costs of distributing and selling Class C shares, including
compensation of personnel of the Distributor who support distribution of
Class C shares. If the Plan is terminated by the Fund, the Board of
Directors may allow the Fund to continue payments of the service fee
and/or asset-based sales charge to the Distributor for distributing Class
C shares before the plan was terminated.
- Waivers of Class B and Class C Sales Charges. The Class B and
Class C contingent deferred sales charges will not be applied to shares
purchased in certain types of transactions nor will it apply to shares
redeemed in certain circumstances as described below. The reasons for
this policy are in "Reduced Sales Charges" in the Statement of Additional
Information.
Waivers for Redemptions in Certain Cases. The Class B and Class C
contingent deferred sales charges will be waived for redemptions of shares
in the following cases:
- to make distributions to participants or beneficiaries from
Retirement Plans, if the distributions are made (a) under an Automatic
Withdrawal Plan after the participant reaches age 59-1/2, as long as the
payments are no more than 10% of the account value annually (measured from
the date the Transfer Agent received the request), or (b) following the
death or disability (as defined in the Internal Revenue Code ("IRC")) of
the participant or beneficiary (the death or disability must have occurred
after the account was established);
- redemptions from accounts other than Retirement Plans following the
death or disability of the last surviving shareholder (the death or
disability must have occurred after the account was established, and for
disability you must provide evidence of a determination of disability by
the Social Security Administration);
- to make returns of excess contributions to Retirement Plans;
- to make distributions from IRAs (including SEP-IRAs and SAR/SEP
accounts) before the participant is age 59-1/2, and distributions from
403(b)(7) custodial plans or pension or profit sharing plans before the
participant is age 59-1/2 but only after the participant has separated
from service, if the distributions are made in substantially equal
periodic payments over the life (or life expectancy) of the participant
or the joint lives (or joint life and last survivor expectancy) of the
participant and the participant's designated beneficiary (and the
distributions must comply with other requirements for such distributions
under the IRC and may not exceed 10% of the account value annually,
measured from the date the Transfer Agent received the request);
- shares redeemed involuntarily, as described in "Shareholder Account
Rules and Policies," below; or
- distributions from OppenheimerFunds prototype 401(k) plans: (1)
for hardship withdrawals; (2) under a Qualified Domestic Relations
Order, as defined in the IRC; (3) to meet minimum distribution
requirements as defined in the IRC; (4) to make "substantially equal
periodic payments" as described in Section 72(t) of the IRC; (5) for
separation from service.
Waivers for Shares Sold or Issued in Certain Transactions. The
contingent deferred sales charge is also waived on Class B and Class C
shares sold or issued in the following cases:
- shares sold to the Manager or its affiliates;
- shares sold to registered management investment companies or
separate accounts of insurance companies having an agreement with the
Manager or the Distributor for that purpose; or
- shares issued in plans or reorganization to which the Fund is a
party.
Special Investor Services
AccountLink. OppenheimerFunds AccountLink links your Fund account to your
account at your bank or other financial institution to enable you to send
money electronically between those accounts to perform a number of types
of account transactions. These include purchases of shares by telephone
(either through a service representative or by PhoneLink, described
below), automatic investments under Asset Builder Plans, and sending
dividends and distributions or Automatic Withdrawal Plan payments directly
to your bank account. Please refer to the Application for details or call
the Transfer Agent for more information.
AccountLink privileges should be requested on the Application you use
to buy shares, or on your dealer's settlement instructions if you buy your
shares through your dealer. After your account is established, you can
request AccountLink privileges by sending signature-guaranteed
instructions to the Transfer Agent. AccountLink privileges will apply to
each shareholder listed in the registration on your account as well as to
your dealer representative of record unless and until the Transfer Agent
receives written instructions terminating or changing those privileges.
After you establish AccountLink for your account, any change of bank
account information must be made by signature-guaranteed instructions to
the Transfer Agent signed by all shareholders who own the account.
- Using AccountLink to Buy Shares. Purchases may be made by
telephone only after your account has been established. To purchase shares
in amounts up to $250,000 through a telephone representative, call the
Distributor at 1-800-852-8457. The purchase payment will be debited from
your bank account.
- PhoneLink. PhoneLink is the OppenheimerFunds automated
telephone system that enables shareholders to perform a number of account
transactions automatically using a touch-tone phone. PhoneLink may be used
on already-established Fund accounts after you obtain a Personal
Identification Number (PIN), by calling the special PhoneLink number: 1-
800-533-3310.
- Purchasing Shares. You may purchase shares in amounts up to
$100,000 by phone, by calling 1-800-533-3310. You must have established
AccountLink privileges to link your bank account with the Fund, to pay for
these purchases.
- Exchanging Shares. With the OppenheimerFunds exchange privilege,
described below, you can exchange shares automatically by phone from your
Fund account to another OppenheimerFunds account you have already
established by calling the special PhoneLink number. Please refer to "How
to Exchange Shares," below, for details.
- Selling Shares. You can redeem shares by telephone automatically
by calling the PhoneLink number and the Fund will send the proceeds
directly to your AccountLink bank account. Please refer to "How to Sell
Shares," below, for details.
Automatic Withdrawal and Exchange Plans. Each Fund has several plans that
enable you to sell shares automatically or exchange them to another
Oppenheimer funds account on a regular basis:
- Automatic Withdrawal Plans. If your Fund account is $5,000 or more,
you can establish an Automatic Withdrawal Plan to receive payments of at
least $50 on a monthly, quarterly, semi-annual or annual basis. The checks
may be sent to you or sent automatically to your bank account on
AccountLink. You may even set up certain types of withdrawals of up to
$1,500 per month by telephone. You should consult the Application and
Statement of Additional Information for more details.
- Automatic Exchange Plans. You can authorize the Transfer Agent to
exchange an amount you establish in advance automatically for shares of
up to five other Oppenheimer funds on a monthly, quarterly, semi-annual
or annual basis under an Automatic Exchange Plan. The minimum purchase
for each other Oppenheimer funds account is $25. These exchanges are
subject to the terms of the Exchange Privilege, described below.
Reinvestment Privilege. If you redeem some or all of your Class A shares,
you have up to 6 months to reinvest all or part of the redemption proceeds
in Class A shares of a Fund or other Oppenheimer funds without paying a
sales charge. This privilege applies to Class A shares that you purchased
subject to an initial sales charge and to Class A shares on which you paid
a contingent deferred sales charge when you redeemed them. It does not
apply to Class C shares. Please consult the Statement of Additional
Information for more details.
Retirement Plans. Fund shares are available as an investment for your
retirement plans. If you participate in a plan sponsored by your employer,
the plan trustee or administrator must make the purchase of shares for
your retirement plan account. The Distributor offers a number of different
retirement plans that can be used by individuals and employers:
- Individual Retirement Accounts including rollover IRAs, for
individuals and their spouses
- 403(b)(7) Custodial Plans for employees of eligible tax-exempt
organizations, such as schools, hospitals and charitable organizations
- SEP-IRAs (Simplified Employee Pension Plans) for small business
owners or people with income from self-employment, including SAR/SEP IRAs
- Pension and Profit-Sharing Plans for self-employed persons and
small business owners
- 401(k) prototype retirement plans for businesses
Please call the Distributor for the OppenheimerFunds plan documents,
which contain important information and applications.
How to Sell Shares
You can arrange to take money out of your account by selling
(redeeming) some or all of your shares on any regular business day. Your
shares will be sold at the next net asset value calculated after your
order is received and accepted by the Transfer Agent. The Fund offers you
a number of ways to sell your shares: in writing or by telephone. You can
also set up Automatic Withdrawal Plans to redeem shares on a regular
basis, as described above. If you have questions about any of these
procedures, and especially if you are redeeming shares in a special
situation, such as due to the death of the owner, or from a retirement
plan, please call the Transfer Agent first, at 1-800-525-7048, for
assistance.
- Retirement Accounts. To sell shares in an OppenheimerFunds
retirement account in your name, call the Transfer Agent for a
distribution request form. There are special income tax withholding
requirements for distributions from retirement plans and you must submit
a withholding form with your request to avoid delay. If your retirement
plan account is held for you by your employer, you must arrange for the
distribution request to be sent by the plan administrator or trustee.
There are additional details in the Statement of Additional
Information.
- Certain Requests Require A Signature Guarantee. To protect you and
each Fund from fraud, certain redemption requests must be in writing and
must include a signature guarantee in the following situations (there may
be other situations also requiring a signature guarantee):
- You wish to redeem more than $50,000 worth of shares and receive
a check
- The redemption check is not payable to all shareholders listed on
the account statement
- The redemption check is not sent to the address of record on your
statement
- Shares are being transferred to a Fund account with a different
owner or name
- Shares are redeemed by someone other than the owners (such as an
Executor)
- Where Can I Have My Signature Guaranteed? The Transfer Agent will
accept a guarantee of your signature by a number of financial
institutions, including: a U.S. bank, trust company, credit union or
savings association, or by a foreign bank that has a U.S. correspondent
bank, or by a U.S. registered dealer or broker in securities, municipal
securities or government securities, or by a U.S. national securities
exchange, a registered securities association or a clearing agency. If you
are signing as a fiduciary or on behalf of a corporation, partnership or
other business, you must also include your title in the signature.
Selling Shares by Mail. Write a "letter of instructions" that includes:
- Your name
- The Fund's name
- Your Fund account number (from your account statement)
- The dollar amount or number of shares to be redeemed
- Any special payment instructions
- Any share certificates for the shares you are selling,
- The signatures of all registered owners exactly as the account is
registered, and
- Any special requirements or documents requested by the Transfer
Agent to assure proper authorization of the person asking to sell shares.
Use the following address for Send courier or Express Mail
request by mail: requests to:
OppenheimerFunds Services OppenheimerFunds Services
P.O. Box 5270 10200 E. Girard Avenue, Building D
Denver, Colorado 80217 Denver, Colorado 80231
Selling Shares by Telephone. You and your dealer representative of record
may also sell your shares by telephone. To receive the redemption price
on a regular business day, your call must be received by the Transfer
Agent by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. Shares held in an
OppenheimerFunds retirement plan or under a share certificate may not be
redeemed by telephone.
- To redeem shares through a service representative, call 1-800-852-
8457
- To redeem shares automatically on PhoneLink, call 1-800-533-3310
Whichever method you use, you may have a check sent to the address
on the account statement, or, if you have linked your Fund account to your
bank account on AccountLink, you may have the proceeds wired to that bank
account.
- Telephone Redemptions Paid by Check. Up to $50,000 may be redeemed
by telephone in any 7-day period. The check must be payable to all owners
of record of the shares and must be sent to the address on the account.
This service is not available within 30 days of changing the address on
an account.
- Telephone Redemptions Through AccountLink. There are no dollar
limits on telephone redemption proceeds sent to a bank account designated
when you establish AccountLink. Normally the ACH wire to your bank is
initiated on the business day after the redemption. You do not receive
dividends on the proceeds of the shares you redeemed while they are
waiting to be wired.
Selling Shares Through Your Dealer. The Distributor has made arrangements
to repurchase Fund shares from dealers and brokers on behalf of their
customers. Brokers or dealers may charge for that service. Please refer
to "Special Arrangements for Repurchase of Shares from Dealers and
Brokers" in the Statement of Additional Information for more details.
How to Exchange Shares
Shares of the Funds may be exchanged for shares of certain
OppenheimerFunds at net asset value per share at the time of exchange,
without sales charge. To exchange shares, you must meet several
conditions:
- Shares of the fund selected for exchange must be available for sale
in your state of residence
- The prospectuses of this Fund and the fund whose shares you want
to buy must offer the exchange privilege
- You must hold the shares you buy when you establish your account
for at least 7 days before you can exchange them; after the account is
open 7 days, you can exchange shares every regular business day
- You must meet the minimum purchase requirements for the fund you
purchase by exchange
- Before exchanging into a fund, you should obtain and read its
prospectus
Shares of a particular class may be exchanged only for shares of the
same class in the other OppenheimerFunds. For example, you can exchange
Class A shares of this Fund only for Class A shares of another fund. At
present, Oppenheimer Money Market Fund, Inc. offers only one class of
shares, which are considered Class A shares for this purpose. In some
cases, sales charges may be imposed on exchange transactions. Please
refer to "How to Exchange Shares" in the Statement of Additional
Information for more details.
Exchanges may be requested in writing or by telephone:
- Written Exchange Requests. Submit an OppenheimerFunds Exchange
Request form, signed by all owners of the account. Send it to the
Transfer Agent at the addresses listed in "How to Sell Shares."
- Telephone Exchange Requests. Telephone exchange requests may be
made either by calling a service representative at 1-800-852-8457 or by
using PhoneLink for automated exchanges, by calling 1-800-533-3310.
Telephone exchanges may be made only between accounts that are registered
with the same name(s) and address. Shares held under certificates may not
be exchanged by telephone.
You can find a list of OppenheimerFunds currently available for
exchanges in the Statement of Additional Information or by calling a
service representative at 1-800-525-7048. Exchanges of shares involve a
redemption of the shares of the fund you own and a purchase of shares of
the other fund.
There are certain exchange policies you should be aware of:
- Shares are normally redeemed from one fund and purchased from the
other fund in the exchange transaction on the same regular business day
on which the Transfer Agent receives an exchange request that is in proper
form by the close of The New York Stock Exchange that day, which is
normally 4:00 P.M. but may be earlier on some days. However, either fund
may delay the purchase of shares of the fund you are exchanging into if
it determines it would be disadvantaged by a same-day transfer of the
proceeds to buy shares. For example, the receipt of multiple exchange
requests from a dealer in a "market-timing" strategy might require the
disposition of securities at a time or price disadvantageous to the Fund.
- Because excessive trading can hurt fund performance and harm
shareholders, the Fund reserves the right to refuse any exchange request
that will disadvantage it, or to refuse multiple exchange requests
submitted by a shareholder or dealer.
- The Fund may amend, suspend or terminate the exchange privilege at
any time. Although the Fund will attempt to provide you notice whenever
it is reasonably able to do so, it may impose these changes at any time.
- If the Transfer Agent cannot exchange all the shares you request
because of a restriction cited above, only the shares eligible for
exchange will be exchanged.
Shareholder Account Rules and Policies
- Net Asset Value Per Share is determined for each class of shares
as of the close of the New York Stock Exchange, which is normally 4:00
P.M. but may be earlier on some days, on each day the Exchange is open by
dividing the value of each Fund's net assets attributable to a class by
the number of shares of that class that are outstanding. The Fund's Board
of Directors has established procedures to value each Fund's securities
to determine net asset value. In general, securities values are based on
market value. There are special procedures for valuing illiquid and
restricted securities and obligations for which market values cannot be
readily obtained. These procedures are described more completely in the
Statement of Additional Information.
- The offering of shares may be suspended during any period in which
the determination of net asset value is suspended, and the offering may
be suspended by the Board of Directors at any time the Board believes it
is in the Fund's best interest to do so.
- Telephone Transaction Privileges for purchases, redemptions or
exchanges may be modified, suspended or terminated by the Funds at any
time. If an account has more than one owner, the Fund and the Transfer
Agent may rely on the instructions of any one owner. Telephone privileges
apply to each owner of the account and the dealer representative of record
for the account unless and until the Transfer Agent receives cancellation
instructions from an owner of the account.
- The Transfer Agent will record any telephone calls to verify data
concerning transactions and has adopted other procedures to confirm that
telephone instructions are genuine, by requiring callers to provide tax
identification numbers and other account data or by using PINs, and by
confirming such transactions in writing. If the Transfer Agent does not
use reasonable procedures it may be liable for losses due to unauthorized
transactions, but otherwise neither it nor a Fund will be liable for
losses or expenses arising out of telephone instructions reasonably
believed to be genuine. If you are unable to reach the Transfer Agent
during periods of unusual market activity, you may not be able to complete
a telephone transaction and should consider placing your order by mail.
- Redemption or transfer requests will not be honored until the
Transfer Agent receives all required documents in proper form. From time
to time, the Transfer Agent in its discretion may waive certain of the
requirements for redemptions stated in this Prospectus.
- Dealers that can perform account transactions for their clients by
participating in NETWORKING through the National Securities Clearing
Corporation are responsible for obtaining their clients' permission to
perform those transactions and are responsible to their clients who are
shareholders of the Fund if the dealer performs any transaction
erroneously.
- The redemption price for shares will vary from day to day because
the value of the securities in each Fund's portfolio fluctuates, and the
redemption price, which is the net asset value per share, will normally
be different for Class A, Class B and Class C shares. Therefore, the
redemption value of your shares may be more or less than their original
cost.
- Payment for redeemed shares is made ordinarily in cash and
forwarded by check or through AccountLink (as elected by the shareholder
under the redemption procedures described above) within 7 days after the
Transfer Agent receives redemption instructions in proper form, except
under unusual circumstances determined by the Securities and Exchange
Commission delaying or suspending such payments. For accounts registered
in the name of a broker-dealer, payment will be forwarded within 3
business days. The Transfer Agent may delay forwarding a check or
processing a payment via AccountLink for recently purchased shares, but
only until the purchase payment has cleared. That delay may be as much
as 10 days from the date the shares were purchased. That delay may be
avoided if you purchase shares by certified check or arrange with your
bank to provide telephone or written assurance to the Transfer Agent that
your purchase payment has cleared.
- Involuntary redemptions of small accounts may be made by the Fund
if the account value has fallen below $500 for reasons other than the fact
that the market value of shares has dropped, and in some cases involuntary
redemptions may be made to repay the Distributor for losses from the
cancellation of share purchase orders.
- Under unusual circumstances, shares of a Fund may be redeemed "in
kind", which means that the redemption proceeds will be paid with
securities from the Fund's portfolio. Please refer to the Statement of
Additional Information for more details.
- "Backup Withholding" of Federal income tax may be applied at the
rate of 31% from dividends, distributions and redemption proceeds
(including exchanges) if you fail to furnish the Fund a certified Social
Security or taxpayer identification number when you sign your application,
or if you violate Internal Revenue Service regulations on tax reporting
of dividends.
- The Fund does not charge a redemption fee, but if your dealer or
broker handles your redemption, they may charge a fee. That fee can be
avoided by redeeming your Fund shares directly through the Transfer Agent.
Under the circumstances described in "How To Buy Shares," you may be
subject to a contingent deferred sales charges when redeeming certain
Class A, Class B and Class C shares.
- To avoid sending duplicate copies of materials to households, each
Fund will mail only one copy of each annual and semi-annual report to
shareholders having the same last name and address on the Fund's records.
However, each shareholder may call the Transfer Agent at 1-800-525-7048
to ask that copies of those materials be sent personally to that
shareholder.
- Transfer Agent and Shareholder Servicing Agent. The transfer agent
and shareholder servicing agent is OppenheimerFunds Services, a division
of the Manager, whose address is P.O. Box 5270, Denver, Colorado 80217.
Unified Management Corporation (1-800-346-4601) is the shareholder
servicing agent for former shareholders of the AMA Family of Funds and
clients of AMA Investment Advisers, L.P. who acquire shares of the Fund,
and for former shareholders of the Unified Funds and Liquid Green Trusts,
accounts which participated or participate in a retirement plan for which
Unified Investment Advisers, Inc. or an affiliate acts as custodian or
trustee, and other accounts for which Unified Management Corporation is
the dealer of record.
Dividends, Capital Gains and Taxes
Dividends. The Fund declares dividends separately for Class A, Class
B and Class C shares from net investment income on an annual basis and
normally pays those dividends to shareholders following the end of its
fiscal year, which is October 31. Dividends paid on Class A shares
generally are expected to be higher than for Class B and Class C shares
because expenses allocable to Class B and Class C shares will generally
be higher than for Class A shares. There is no fixed dividend rate and
there can be no assurance as to the payment of any dividends.
Capital Gains. The Fund may make distributions annually in December out
of any net short-term or long-term capital gains, and the Fund may make
supplemental distributions of dividends and capital gains following the
end of its fiscal year. Short-term capital gains are treated as dividends
for tax purposes. Long-term capital gains will be separately identified
in the tax information the Fund sends you after the end of the calendar
year. There can be no assurances that the Fund will pay any capital gains
distributions in a particular year.
Distribution Options. When you open your account, specify on your
application how you want to receive your distributions. For
OppenheimerFunds retirement accounts, all distributions are reinvested.
For other accounts, you have four options:
- Reinvest All Distributions in the Fund. You can elect to reinvest
all dividends and long-term capital gains distributions in additional
shares of the Fund.
- Reinvest Capital Gains Only. You can elect to reinvest long-term
capital gains in the Fund while receiving dividends by check or sent to
your bank account on AccountLink.
- Receive All Distributions in Cash. You can elect to receive a check
for all dividends and long-term capital gains distributions or have them
sent to your bank on AccountLink.
- Reinvest Your Distributions in Another Oppenheimer Fund Account.
You can reinvest all distributions in another Oppenheimer fund account you
have established.
Taxes. If your account is not a tax-deferred retirement account, you
should be aware of the following tax implications of investing in a Fund.
Long-term capital gains are taxable as long-term capital gains when
distributed to shareholders. It does not matter how long you held your
shares. Dividends paid from short-term capital gains and net investment
income are taxable as ordinary income. Distributions are subject to
federal income tax and may be subject to state or local taxes. Your
distributions are taxable when paid, whether you reinvest them in
additional shares or take them in cash. Every year each Fund will send you
and the IRS a statement showing the amount of each taxable distribution
you received in the previous year.
- "Buying a Dividend": When a Fund goes ex-dividend, its share price
is reduced by the amount of the distribution. If you buy shares on or
just before the ex-dividend date, or just before the Fund declares a
capital gains distribution, you will pay the full price for the shares and
then receive a portion of the price back as a taxable dividend or capital
gain.
- Taxes on Transactions: Share redemptions, including redemptions for
exchanges, are subject to capital gains tax. A capital gain or loss is
the difference between the price you paid for the shares and the price you
received when you sold them.
- Returns of Capital: In certain cases distributions made by a Fund
may be considered a non-taxable return of capital to shareholders. If
that occurs, it will be identified in notices to shareholders. A non-
taxable return of capital may reduce your tax basis in your Fund shares.
This information is only a summary of certain federal tax information
about your investment. More information is contained in the Statement of
Additional Information, and in addition you should consult with your tax
adviser about the effect of an investment in a Fund on your particular tax
situation.
<PAGE>
APPENDIX A
Special Sales Charge Arrangements for Shareholders of
the Former Quest for Value Funds
The initial and contingent sales charge rates and waivers for Class
A, Class B and Class C shares described elsewhere in this Prospectus are
modified as described below for those shareholders of (i) Quest for Value
Fund, Inc., Quest for Value Growth and Income Fund, Quest for Value
Opportunity Fund, Quest for Value Small Capitalization Fund and Quest for
Value Global Equity Fund, Inc. on November 24, 1995, when
OppenheimerFunds, Inc. became the investment adviser to those funds, and
(ii) Quest for Value U.S. Government Income Fund, Quest for Value
Investment Quality Income Fund, Quest for Value Global Income Fund, Quest
for Value New York Tax-Exempt Fund, Quest for Value National Tax-Exempt
Fund and Quest for Value California Tax-Exempt Fund when those funds
merged into various Oppenheimer funds on November 24, 1995. The funds
listed above are referred to in this Prospectus as the "Former Quest for
Value Funds."
Class A Sales Charges
- Reduced Class A Initial Sales Charge Rates for Certain Former Quest
Shareholders
- Purchases by Groups, Associations and Certain Qualified Retirement
Plans. The following table sets forth the initial sales charge rates for
Class A shares purchased by a "Qualified Retirement Plan" through a single
broker, dealer or financial institution, or by members of "Associations"
formed for any purpose other than the purchase of securities if that
Qualified Retirement Plan or that Association purchased shares of any of
the Former Quest for Value Funds or received a proposal to purchase such
shares from OCC Distributors prior to November 24, 1995. For this purpose
only, a "Qualified Retirement Plan" includes any 401(k) plan, 403(b) plan,
and SEP/IRA or IRA plan for employees of a single employer.
Front-End Front-End
Sales Sales Commission
Charge Charge as
as a as a Percentage
Number of Percentage Percentage of
Eligible Employees of Offering of Amount Offering
or Members Price Invested Price
9 or fewer 2.50% 2.56% 2.00%
At least 10 but not
more than 49 2.00% 2.04% 1.60%
For purchases by Qualified Retirement plans and Associations having
50 or more eligible employees or members, there is no initial sales charge
on purchases of Class A shares, but those shares are subject to the Class
A contingent deferred sales charge described on pages 29 to 30 of this
Prospectus.
Purchases made under this arrangement qualify for the lower of the
sales charge rate in the table based on the number of eligible employees
in a Qualified Retirement Plan or members of an Association or the sales
charge rate that applies under the Rights of Accumulation described above
in the Prospectus. In addition, purchases by 401(k) plans that are
Qualified Retirement Plans qualify for the waiver of the Class A initial
sales charge if they qualified to purchase shares of any of the Former
Quest For Value Funds by virtue of projected contributions or investments
of $1 millon or more each year. Individuals who qualify under this
arrangement for reduced sales charge rates as members of Associations, or
as eligible employees in Qualified Retirement Plans also may purchase
shares for their individual or custodial accounts at these reduced sales
charge rates, upon request to the Fund's Distributor.
- Special Class A Contingent Deferred Sales Charge Rates
Class A shares of the Fund purchased by exchange of shares of other
Oppenheimer funds that were acquired as a result of the merger of Former
Quest for Value Funds into those Oppenheimer Funds, and which shares were
subject to a Class A contingent deferred sales charge prior to November
24, 1995 will be subject to a contingent deferred sales charge at the
following rates: if they are redeemed within 18 months of the end of the
calendar month in which they were purchased, at a rate equal to 1.0% if
the redemption occurs within 12 months of their initial purchase and at
a rate of 0.50 of 1.0% if the redemption occurs in the subsequent six
months. Class A shares of any of the Former Quest for Value Funds
purchased without an initial sales charge on or before November 22, 1995
will continue to be subject to the applicable contingent deferred sales
charge in effect as of that date as set forth in the then-current
prospectus for such fund.
- Waiver of Class A Sales Charges for Certain Shareholders
Class A shares of the Fund purchased by the following investors are not
subject to any Class A initial or contingent deferred sales charges:
- Shareholders of the Fund who were shareholders of the AMA Family
of Funds on February 28, 1991 and who acquired shares of any of the Former
Quest for Value Funds by merger of a portfolio of the AMA Family of Funds.
- Shareholders of the Fund who acquired shares of any Former Quest
for Value Fund by merger of any of the portfolios of the Unified
Funds.
- Shareholders of the Fund that have continually owned shares of the
Fund prior to November 1, 1988.
- Waiver of Class A Contingent Deferred Sales Charge in Certain
Transactions
The Class A contingent deferred sales charge will not apply to
redemptions of Class A shares of the Fund purchased by the following
investors who were shareholders of any Former Quest for Value Fund:
- Investors who purchased Class A shares from a dealer that is or was
not permitted to receive a sales load or redemption fee imposed on a
shareholder with whom that dealer has a fiduciary relationship under the
Employee Retirement Income Security Act of 1974 and regulations adopted
under that law.
- Participants in Qualified Retirement Plans that purchased shares
of any of the Former Quest For Value Funds pursuant to a special
"strategic alliance" with the distributor of those funds. The Fund's
Distributor will pay a commission to the dealer for purchases of Fund
shares as described above in "Class A Contingent Deferred Sales Charge."
Class A, Class B and Class C Contingent Deferred Sales Charge
Waivers
- Waivers for Redemptions of Shares Purchased Prior to March 6, 1995
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund if those
shares were purchased prior to March 6, 1995: in connection with
(i) distributions to participants or beneficiaries of plans qualified
under Section 401(a) of the Internal Revenue Code or from custodial
accounts under Section 403(b)(7) of the Code, Individual Retirement
Accounts, deferred compensation plans under Section 457 of the Code, and
other employee benefit plans, and returns of excess contributions made to
each type of plan, (ii) withdrawals under an automatic withdrawal plan
holding only either Class B or C shares if the annual withdrawal does not
exceed 10% of the initial value of the account, and (iii) liquidation of
a shareholder's account if the aggregate net asset value of shares held
in the account is less than the required minimum value of such accounts.
- Waivers for Redemptions of Shares Purchased on or After March 6,
1995 but Prior to November 24, 1995.
In the following cases, the contingent deferred sales charge will be
waived for redemptions of Class A, B or C shares of the Fund if those
shares were purchased on or after March 6, 1995, but prior to November 24,
1995: (1) distributions to participants or beneficiaries from Individual
Retirement Accounts under Section 408(a) of the Internal Revenue Code or
retirement plans under Section 401(a), 401(k), 403(b) and 457 of the Code,
if those distributions are made either (a) to an individual participant
as a result of separation from service or (b) following the death or
disability (as defined in the Code) of the participant or beneficiary;
(2) returns of excess contributions to such retirement plans;
(3) redemptions other than from retirement plans following the death or
disability of the shareholder(s) (as evidenced by a determination of total
disability by the U.S. Social Security Administration); (4) withdrawals
under an automatic withdrawal plan (but only for Class B or C shares)
where the annual withdrawals do not exceed 10% of the initial value of the
account; and (5) liquidation of a shareholder's account if the aggregate
net asset value of shares held in the account is less than the required
minimum account value. A shareholder's account will be credited with the
amount of any contingent deferred sales charge paid on the redemption of
any Class A, B or C shares of the Fund described in this section if within
90 days after that redemption, the proceeds are invested in the same
Class of shares in this Fund or another Oppenheimer fund.
Special Dealer Arrangements
Dealers who sold Class B shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the TRAC-
2000 recordkeeping system and that were transferred to an OppenheimerFunds
prototype 401(k) plan shall be eligible for an additional one-time payment
by the Distributor of 1% of the value of the plan assets transferred, but
that payment may not exceed $5,000 as to any one plan.
Dealers who sold Class C shares of a Former Quest for Value Fund to
Quest for Value prototype 401(k) plans that were maintained on the TRAC-
2000 recordkeeping system and (i) the shares held by those plans were
exchanged for Class A shares, or (ii) the plan assets were transferred to
an OppenheimerFunds prototype 401(k) plan, shall be eligible for an
additional one-time payment by the Distributor of 1% of the value of the
plan assets transferred, but that payment may not exceed $5,000.
<PAGE>
Oppenheimer Quest Value Fund, Inc.
Two World Trade Center
New York, NY 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Auditors
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized
to give any information or to make any representations other than those
contained in this Prospectus or the Additional Statement, and if given or
made, such information and representations must not be relied upon as
having been authorized by the Fund, OppenheimerFunds, Inc.,
OppenheimerFunds Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
<PAGE>
APPENDIX TO PROSPECTUS OF
OPPENHEIMER QUEST VALUE FUND, INC.
Graphic material included in Prospectus of Oppenheimer Quest Value
Fund, Inc.: "Comparison of Total Return of Oppenheimer Quest Value Fund,
Inc. with the S&P 500 Index - Change in Value of $10,000 Hypothetical
Investments in Class A, Class B and Class C Shares of Oppenheimer Quest
Value Fund, Inc. and the S&P 500 Index"
Linear graphs will be included in the Prospectus of Oppenheimer Quest
Value Fund, Inc. (the "Fund") depicting the initial account value and
subsequent account value of a hypothetical $10,000 investment in the Fund.
In the case of the Fund's Class A shares, that graph will cover the
performance of the Fund for the ten fiscal years ended 10/31/95 and in the
case of the Fund's Class B and Class C shares will cover the period from
the inception of the class (September 2, 1993) through 10/31/95. The graph
will compare such values with hypothetical $10,000 investments over the
same time periods in the S&P 500 Index. Set forth below are the relevant
data points that will appear on the linear graph. Additional information
with respect to the foregoing, including a description of the S&P 500
Index, is set forth in the Prospectus under "Performance of the Fund -
Comparing the Fund's Performance to the Market."
Fiscal Year Oppenheimer S&P 500
Ended Quest Value Fund, Inc. Index
10/31/85 $9,425 $10,000
10/31/86 $11,734 $13,319
10/31/87 $11,149 $14,171
10/31/88 $13,243 $16,263
10/31/89 $15,144 $20,548
10/31/90 $12,775 $19,011
10/31/91 $17,288 $23,365
10/31/92 $20,335 $27,889
10/31/93 $22,741 $32,047
10/31/94 $23,802 $33,284
10/31/95 $29,471 $42,074
Fiscal Year Oppenheimer S&P
(Period) Ended Quest Value Fund, Inc.B 500 Index
09/01/93(1) $10,000 $10,000
10/31/93 $ 9,882 $10,136
10/31/94 $10,293 $10,528
10/31/95 $12,988 $13,312
Fiscal Year Oppenheimer S & P
(Period) Ended Quest Value Fund, Inc. C 500 Index
09/01/93(1) $10,000 $10,000
10/31/93 $ 9,874 $10,136
10/31/94 $10,285 $10,528
10/31/95 $12,671 $13,312
(1) Class B and Class C shares of the Fund were first publicly offered
on September 2, 1993.
<PAGE>
OPPENHEIMER QUEST VALUE FUND, INC.
Two World Trade Center, New York, New York 10048
1-800-525-7048
Statement of Additional Information dated February 26, 1996
This document contains additional information about the Fund and
supplements information in the Prospectus dated February 26, 1996. It
should be read together with the Prospectus, which may be obtained upon
written request to the Fund's Transfer Agent, OppenheimerFunds Services
at P.O. Box 5270, Denver, Colorado 80217, or by calling the Transfer Agent
at the toll-free number shown above.
Contents
Page
About the Fund
Investment Objective and Policies
Investment Policies and Strategies
Other Investment Techniques and Strategies
Other Investment Restrictions
How the Fund is Managed
Organization and History
Directors and Officers of the Fund
The Manager and Its Affiliates
Brokerage Policies of the Fund
Performance of the Fund
Distribution and Service Plans
About Your Account
How To Buy Shares
How To Sell Shares
How To Exchange Shares
Dividends, Capital Gains and Taxes
Additional Information About the Fund
Financial Information About the Fund
Independent Auditors' Report
Financial Statements
Appendix A: Description of Ratings A-1
Appendix B: Corporate Industry Classifications B-1
<PAGE>
ABOUT THE FUND
Investment Objective and Policies
Investment Policies and Strategies. The investment objective and
policies of the Fund are described in the Prospectus. Set forth below is
supplemental information about those policies and the types of securities
in which the Fund invests, as well as the strategies the Fund may use to
try to achieve its objective. Capitalized terms used in this Statement
of Additional Information have the same meaning as those terms have in the
Prospectus.
- Foreign Securities. "Foreign securities" include equity and debt
securities of companies organized under the laws of countries other than
the United States and debt securities of foreign governments that are
traded on foreign securities exchanges or in the foreign over-the-counter
markets. Securities of foreign issuers that are represented by American
Depository Receipts or that are listed on a U.S. securities exchange or
traded in the U.S. over-the-counter markets are not considered "foreign
securities" for the purpose of the Fund's investment allocations, because
they are not subject to many of the special considerations and risks,
discussed below, that apply to foreign securities traded and held abroad.
Investing in foreign securities offers potential benefits not
available from investing solely in securities of domestic issuers,
including the opportunity to invest in foreign issuers that appear to
offer growth potential, or in foreign countries with economic policies or
business cycles different from those of the U.S., or to reduce
fluctuations in portfolio value by taking advantage of foreign stock
markets that do not move in a manner parallel to U.S. markets. If the
Fund's portfolio securities are held abroad, the countries in which they
may be held and the sub-custodians holding them must be approved by the
Corporation's Board of Directors where required under applicable rules of
the Securities and Exchange Commission.
- Risks of Foreign Investing. Investments in foreign securities
present special additional risks and considerations not typically
associated with investments in domestic securities: reduction of income
by foreign taxes; fluctuation in value of foreign portfolio investments
due to changes in currency rates and control regulations (e.g., currency
blockage); transaction charges for currency exchange; lack of public
information about foreign issuers; lack of uniform accounting, auditing
and financial reporting standards comparable to those applicable to
domestic issuers; less volume on foreign exchanges than on U.S. exchanges;
greater volatility and less liquidity on foreign markets than in the U.S.;
less regulation of foreign issuers, stock exchanges and brokers than in
the U.S.; greater difficulties in commencing lawsuits and obtaining
judgments in foreign courts; higher brokerage commission rates than in the
U.S.; increased risks of delays in settlement of portfolio transactions
or loss of certificates for portfolio securities; possibilities in some
countries of expropriation, confiscatory taxation, political, financial
or social instability or adverse diplomatic developments; and unfavorable
differences between the U.S. economy and foreign economies. In the past,
U.S. Government policies have discouraged certain investments abroad by
U.S. investors, through taxation or other restrictions, and it is
possible that such restrictions could be re-imposed.
Emerging Markets. The Fund may invest in emerging market countries.
Certain developing countries may have relatively unstable governments,
economies based on only a few industries that are dependent upon
international trade and reduced secondary market liquidity. Foreign
investment in certain emerging market counties is restricted or controlled
in varying degrees. In the past, securities in these countries have
experienced greater price movement, both positive and negative, than
securities of companies located in developed countries. Lower-rated high-
yielding emerging market securities may be considered to have speculative
elements.
- U.S. Government Securities. Obligations of U.S. Government
agencies or instrumentalities (including mortgage-backed securities) may
or may not be guaranteed or supported by the "full faith and credit" of
the United States. Some are backed by the right of the issuer to borrow
from the U.S. Treasury; others, by discretionary authority of the U.S.
Government to purchase the agencies' obligations; while others are
supported only by the credit of the instrumentality. All U.S. Treasury
obligations are backed by the full faith and credit of the United States.
If the securities are not backed by the full faith and credit of the
United States, the owner of the securities must look principally to the
agency issuing the obligation for repayment and may not be able to assert
a claim against the United States in the event that the agency or
instrumentality does not meet its commitment. The Fund will invest in
U.S. Government Securities of such agencies and instrumentalities only
when the Manager is satisfied that the credit risk with respect to such
instrumentality is minimal.
- Money Market Securities. As stated in the Prospectus, the Fund
typically invests a part of its assets in money market securities, and may
invest up to 100% of its total assets in money market securities for
temporary defensive purposes. Money market securities in which the Fund
may invest include the following:
- Time Deposits and Variable Rate Notes. The Fund may invest in
fixed time deposits, whether or not subject to withdrawal penalties.
However, investment in such deposits which are subject to withdrawal
penalties, other than overnight deposits, are subject to the 15% limit on
illiquid investments set forth in the Prospectus for the Fund.
The commercial paper obligations which the Fund may buy are unsecured
and may include variable rate notes. The nature and terms of a variable
rate note (i.e., a "Master Note") permit the Fund to invest fluctuating
amounts at varying rates of interest pursuant to a direct arrangement
between the Fund as lender, and the issuer, as borrower. It permits daily
changes in the amounts borrowed. The Fund has the right at any time to
increase, up to the full amount stated in the note agreement, or to
decrease the amount outstanding under the note. The issuer may prepay at
any time and without penalty any part or the full amount of the note. The
note may or may not be backed by one or more bank letters of credit.
Because these notes are direct lending arrangements between the Fund and
the issuer, it is not generally contemplated that they will be traded;
moreover, there is currently no secondary market for them. Except as
specifically provided in the Prospectus for the Fund, there is no
limitation on the type of issuer from whom these notes will be purchased.
However, in connection with such purchase and on an ongoing basis, OpCap
Advisors (the "Subadvisor") will consider the earning power, cash flow and
other liquidity ratios of the issuer, and its ability to pay principal and
interest on demand, including a situation in which all holders of such
notes made demand simultaneously. The Fund will not invest more than 5%
of its total assets in variable rate notes. Variable rate notes are
subject to the Fund's investment restriction on illiquid securities unless
such notes can be put back to the issuer on demand within seven days.
- Insured Bank Obligations. The Federal Deposit Insurance
Corporation ("FDIC") insures the deposits of federally insured banks and
savings and loan associations (collectively referred to as "banks") up to
$100,000. The Fund may, within the limits set forth in the Prospectus,
purchase bank obligations which are fully insured as to principal by the
FDIC. Currently, to remain fully insured as to principal, these
investments must be limited to $100,000 per bank. If the principal amount
and accrued interest together exceed $100,000, the excess principal and
accrued interest will not be insured. Insured bank obligations may have
limited marketability. Unless the Board of Directors determines that a
readily available market exists for such obligations, the Fund will treat
such obligations as subject to the 15% limit for illiquid investments set
forth in the Prospectus for the Fund unless such obligations are payable
at principal amount plus accrued interest on demand or within seven days
after demand.
- Convertible Securities. The Fund may invest in fixed-income
securities which are convertible into common stock. Convertible
securities rank senior to common stocks in a corporation's capital
structure and, therefore, entail less risk than the corporation's common
stock. The value of a convertible security is a function of its
"investment value" (its value as if it did not have a conversion
privilege), and its "conversion value" (the security's worth if it were
to be exchanged for the underlying security, at market value, pursuant to
its conversion privilege).
To the extent that a convertible security's investment value is
greater than its conversion value, its price will be primarily a
reflection of such investment value and its price will be likely to
increase when interest rates fall and decrease when interest rates rise,
as with a fixed-income security (the credit standing of the issuer and
other factors may also have an effect on the convertible security's
value). If the conversion value exceeds the investment value, the price
of the convertible security will rise above its investment value and, in
addition, will sell at some premium over its conversion value. (This
premium represents the price investors are willing to pay for the
privilege of purchasing a fixed-income security with a possibility of
capital appreciation due to the conversion privilege.) At such times the
price of the convertible security will tend to fluctuate directly with the
price of the underlying equity security. Convertible securities may be
purchased by the Fund at varying price levels above their investment
values and/or their conversion values in keeping with the Fund's
objectives.
- Investment Risks of Fixed-Income Securities. All fixed-income
securities are subject to two types of risks: credit risk and interest
rate risk. Credit risk relates to the ability of the issuer to meet
interest or principal payments on a security as they become due.
Generally, higher yielding lower-grade bonds are subject to credit risk
to a greater extent than lower yielding, investment grade bonds. Interest
rate risk refers to the fluctuations in value of fixed-income securities
resulting solely from the inverse relationship between price and yield of
outstanding fixed-income securities. An increase in prevailing interest
rates will generally reduce the market value of already-issued fixed-
income investments, and a decline in interest rates will tend to increase
their value. In addition, debt securities with longer maturities, which
tend to produce higher yields, are subject to potentially greater changes
in their prices from changes in interest rates than obligations with
shorter maturities. Fluctuations in the market value of fixed-income
securities after the Fund buys them will not affect the interest payable
on those securities, nor the cash income from such securities. However,
those price fluctuations will be reflected in the valuations of these
securities and therefore the Fund's net asset values.
- Lower-Grade Securities. The Fund may invest up to 5% of its assets
in bonds rated below "BBB" by Standard & Poor's Corporation, or "Baa3" by
Moody's Investors Service, Inc. (commonly known as "high yield" or "junk
bonds"), or that have a comparable rating from another rating
organization. If unrated, the security must be determined by the Sub-
Adviser to be of comparable quality to securities rated less than
investment grade.
Special Risks of Lower-Grade Securities. High yield, lower-grade
securities, whether rated or unrated, often have speculative
characteristics. Lower-grade securities have special risks that make them
riskier investments than investment grade securities. They may be subject
to greater market fluctuations and risk of loss of income and principal
than lower yielding, investment-grade securities. There may be less of
a market for them and therefore they may be harder to sell at an
acceptable price. There is a relatively greater possibility that the
issuer's earnings may be insufficient to make the payments of interest due
on the bonds. The issuer's low creditworthiness may increase the
potential for its insolvency.
These risks mean that the Fund may not achieve the expected income
from lower-grade securities, and that the Fund's net asset value per share
may be affected by declines in value of these securities. However, the
Fund's limitations on investments in these types of securities may reduce
some of the risk, as will the Fund's policy of diversifying its
investments.
- Rights and Warrants. The Fund may not invest more than 5% of its
assets at the time of purchase in warrants (other than those that have
been acquired in units or attached to other securities). Of such 5%, not
more than 2% of the assets at the time of purchase may be invested in
warrants that are not listed on the New York or American Stock Exchanges.
Warrants basically are options to purchase equity securities at specific
prices valid for a specific period of time. Their prices do not
necessarily move parallel to the prices of the underlying securities.
Rights are similar to warrants, but normally have a short duration and are
distributed directly by the issuer to its shareholders. Rights and
warrants have no voting rights, receive no dividends and have no rights
with respect to the assets of the issuer.
- Investing in Small, Unseasoned Companies. The securities of small,
unseasoned companies may have a limited trading market, which may
adversely affect the Fund's ability to dispose of them and can reduce the
price the Fund might be able to obtain for them. If other investment
companies and investors that invest in this type of securities trade the
same securities when the Fund attempts to dispose of its holdings, the
Fund may receive lower prices than might otherwise be obtained, because
of the thinner market for such securities.
Other Investment Techniques and Strategies.
- Borrowing. From time to time, the Fund may increase its ownership
of securities by borrowing from banks on a unsecured basis and investing
the borrowed funds, subject to the restrictions stated in the Prospectus.
Any such borrowing will be made only from banks, and pursuant to the
requirements of the Investment Company Act, will be made only to the
extent that the value of that Fund's assets, less its liabilities other
than borrowings, is equal to at least 300% of all borrowings including the
proposed borrowing and amounts covering the Fund's obligations under
"forward roll" transactions. If the value of the Fund's assets so computed
should fail to meet the 300% asset coverage requirement, the Fund is
required within three days to reduce its bank debt to the extent necessary
to meet such requirement and may have to sell a portion of its investments
at a time when independent investment judgment would not dictate such
sale. Borrowing for investment increases both investment opportunity and
risk. Since substantially all of the Fund's assets fluctuate in value,
but borrowing obligations are fixed, when the Fund has outstanding
borrowings, its net asset value per share correspondingly will tend to
increase and decrease more when portfolio assets fluctuate in value than
otherwise would be the case.
- When-Issued Securities. The Fund may take advantage of offerings
of eligible portfolio securities on a "when-issued" basis where delivery
of and payment for such securities take place sometime after the
transaction date on terms established on such date. Normally, settlement
on U.S. Government securities takes place within ten days. The Fund only
will make when-issued commitments on eligible securities with the
intention of actually acquiring the securities. If the Fund chooses to
dispose of the right to acquire a when-issued security prior to its
acquisition, it could, as with the disposition of any other portfolio
obligation, incur a gain or loss due to market fluctuation. When-issued
commitments will not be made if, as a result, more than 15% of the net
assets of the Fund would be so committed.
- Repurchase Agreements. The Fund may acquire securities subject to
repurchase agreements for liquidity purposes to meet anticipated
redemptions, or pending the investment of the proceeds from sales of Fund
shares, or pending the settlement of purchases of portfolio securities.
In a repurchase transaction, the Fund acquires a security from, and
simultaneously resells it to, an approved vendor. An "approved vendor"
is a U.S. commercial bank or the U.S. branch of a foreign bank or a
broker-dealer that has been designated a primary dealer in government
securities, that must meet credit requirements set by the Fund's Board of
Directors from time to time. The resale price exceeds the purchase price
by an amount that reflects an agreed-upon interest rate effective for the
period during which the repurchase agreement is in effect. The majority
of these transactions run from day to day, and delivery pursuant to the
resale typically will occur within one to five days of the purchase.
Repurchase agreements are considered "loans" under the Investment Company
Act, collateralized by the underlying security. The Fund's repurchase
agreements require that at all times while the repurchase agreement is in
effect, the value of the collateral must equal or exceed the repurchase
price to fully collateralize the repayment obligation. Additionally, the
Manager will impose creditworthiness requirements to confirm that the
vendor is financially sound and will continuously monitor the collateral's
value.
- Illiquid and Restricted Securities. To enable the Fund to sell
restricted securities not registered under the Securities Act of 1933, the
Fund may have to cause those securities to be registered. The expenses
of registration of restricted securities may be negotiated by the Fund
with the issuer at the time such securities are purchased by the Fund,
if such registration is required before such securities may be sold
publicly. When registration must be arranged because the Fund wishes to
sell the security, a considerable period may elapse between the time the
decision is made to sell the securities and the time the Fund would be
permitted to sell them. The Fund would bear the risks of any downward
price fluctuation during that period. The Fund may also acquire, through
private placements, securities having contractual restrictions on their
resale, which might limit the Fund's ability to dispose of such securities
and might lower the amount realizable upon the sale of such securities.
The Fund has percentage limitations that apply to purchases of
restricted securities, as stated in the Prospectus. Those percentage
restrictions do not limit purchases of restricted securities that are
eligible for sale to qualified institutional purchasers pursuant to Rule
144A under the Securities Act of 1933, provided that those securities have
been determined to be liquid by the Board of Directors of the Fund or by
the Sub-Advisor under Board-approved guidelines. Those guidelines take
into account the trading activity for such securities and the availability
of reliable pricing information, among other factors. If there is a lack
of trading interest in a particular Rule 144A security, the Fund's holding
of that security may be deemed to be illiquid.
- Loans of Portfolio Securities. The Fund may lend its portfolio
securities subject to the restrictions stated in the Prospectus. Under
applicable regulatory requirements (which are subject to change), the loan
collateral on each business day must at least equal the value of the
loaned securities and must consist of cash, bank letters of credit or
securities of the U.S. Government (or its agencies or instrumentalities).
To be acceptable as collateral, letters of credit must obligate a bank to
pay amounts demanded by the Fund if the demand meets the terms of the
letter. Such terms and the issuing bank must be satisfactory to the Fund.
When it lends securities, the Fund receives amounts equal to the dividends
or interest on loaned securities and also receives one or more of (a)
negotiated loan fees, (b) interest on securities used as collateral, and
(c) interest on short-term debt securities purchased with such loan
collateral. Either type of interest may be shared with the borrower. The
Fund may also pay reasonable finder's, custodian and administrative fees.
The terms of the Fund's loans must meet applicable tests under the
Internal Revenue Code and must permit the Fund to reacquire loaned
securities on five days' notice or in time to vote on any important
matter.
- Hedging With Options and Futures Contracts. The Fund may employ one
or more types of Hedging Instruments for the purposes described in the
Prospectus. When hedging to attempt to protect against declines in the
market value of the Fund's portfolio, or to permit the Fund to retain
unrealized gains in the value of portfolio securities which have
appreciated, or to facilitate selling securities for investment reasons,
the Fund may: (i) sell Stock Index Futures, (ii) buy puts, or (iii) write
covered calls (as described in the Prospectus). When hedging to establish
a position in the equity securities markets as a temporary substitute for
the purchase of individual equity securities the Fund may: (i) buy Stock
Index Futures, or (ii) buy calls on Stock Index Futures. Normally, the
Fund would then purchase the equity securities and terminate the hedging
portion.
The Fund's strategy of hedging with Futures and options on Futures will
be incidental to the Fund's investment activities in the underlying cash
market. In the future, the Fund may employ hedging instruments and
strategies that are not presently contemplated but which may be
subsequently developed, to the extent such investment methods are
consistent with the Fund's investment objective, and are legally
permissible and disclosed in the Prospectus. Additional information about
the hedging instruments the Fund may use is provided below.
- Writing Call Options. As described in the Prospectus, the Fund may
write covered calls. When the Fund writes a call on an investment, it
receives a premium and agrees to sell the callable investment to a
purchaser of a corresponding call during the call period (usually not more
than 9 months) at a fixed exercise price (which may differ from the market
price of the underlying investment) regardless of market price changes
during the call period. To terminate its obligation on a call it has
written, the Fund may purchase a corresponding call in a "closing
purchase transaction." A profit or loss will be realized, depending upon
whether the net of the amount of option transaction costs and the premium
received on the call the Fund has written is more or less than the price
of the call the Fund subsequently purchased. A profit may also be
realized if the call lapses unexercised because the Fund retains the
underlying investment and the premium received. Those profits are
considered short-term capital gains for Federal income tax purposes, as
are premiums on lapsed calls, and when distributed by the Fund are taxable
as ordinary income. If the Fund could not effect a closing purchase
transaction due to the lack of a market, it would have to hold the
callable investment until the call lapsed or was exercised.
The Fund may also write calls on Futures without owning a futures
contract or deliverable securities, provided that at the time the call is
written, the Fund covers the call by segregating in escrow an equivalent
dollar value of deliverable securities or liquid assets. The Fund will
segregate additional liquid assets if the value of the escrowed assets
drops below 100% of the current value of the Future. In no circumstances
would an exercise notice as to a Future put the Fund in a short futures
position.
- Writing Put Options. A put option on securities gives the purchaser
the right to sell, and the writer the obligation to buy, the underlying
investment at the exercise price during the option period. Writing a put
covered by segregated liquid assets equal to the exercise price of the put
has the same economic effect to the Fund as writing a covered call. The
premium the Fund receives from writing a put option represents a profit,
as long as the price of the underlying investment remains above the
exercise price. However, the Fund has also assumed the obligation during
the option period to buy the underlying investment from the buyer of the
put at the exercise price, even though the value of the investment may
fall below the exercise price. If the put expires unexercised, the Fund
(as the writer of the put) realizes a gain in the amount of the premium
less transaction costs. If the put is exercised, the Fund must fulfill
its obligation to purchase the underlying investment at the exercise
price, which will usually exceed the market value of the investment at
that time. In that case, the Fund may incur a loss, equal to the sum of
the sale price of the underlying investment and the premium received minus
the sum of the exercise price and any transaction costs incurred.
When writing put options, to secure its obligation to pay for the
underlying security, the Fund will deposit in escrow liquid assets with
a value equal to or greater than the exercise price of the underlying
securities. The Fund therefore forgoes the opportunity of investing the
segregated assets or writing calls against those assets. As long as the
obligation of the Fund as the put writer continues, it may be assigned an
exercise notice by the exchange or broker-dealer through whom such option
was sold, requiring the Fund to exchange currency at the specified rate
of exchange or to take delivery of the underlying security against payment
of the exercise price. The Fund may have no control over when it may be
required to purchase the underlying security, since it may be assigned an
exercise notice at any time prior to the termination of its obligation as
the writer of the put. This obligation terminates upon expiration of the
put, or such earlier time at which the Fund effects a closing purchase
transaction by purchasing a put of the same series as that previously
sold. Once the Fund has been assigned an exercise notice, it is
thereafter not allowed to effect a closing purchase transaction.
The Fund may effect a closing purchase transaction to realize a profit
on an outstanding put option it has written or to prevent an underlying
security from being put. Furthermore, effecting such a closing purchase
transaction will permit the Fund to write another put option to the extent
that the exercise price thereof is secured by the deposited assets, or to
utilize the proceeds from the sale of such assets for other investments
by the Fund. The Fund will realize a profit or loss from a closing
purchase transaction if the cost of the transaction is less or more than
the premium received from writing the option. As above for writing
covered calls, any and all such profits described herein from writing puts
are considered short-term capital gains for Federal tax purposes, and when
distributed by the Fund, are taxable as ordinary income.
- Purchasing Puts and Calls. The Fund may purchase calls to protect
against the possibility that the Fund's portfolio will not participate in
an anticipated rise in the securities market. When the Fund purchases a
call (other than in a closing purchase transaction), it pays a premium
and, except as to calls on stock indices, has the right to buy the
underlying investment from a seller of a corresponding call on the same
investment during the call period at a fixed exercise price. In
purchasing a call, the Fund benefits only if the call is sold at a profit
or if, during the call period, the market price of the underlying
investment is above the sum of the exercise price, transaction costs, and
the premium paid, and the call is exercised. If the call is not exercised
or sold (whether or not at a profit), it will become worthless at its
expiration date and the Fund will lose its premium payment and the right
to purchase the underlying investment. When the Fund purchases a call on
a stock index, it pays a premium, but settlement is in cash rather than
by delivery of the underlying investment to the Fund.
When the Fund purchases a put, it pays a premium and, except as to puts
on stock indices, has the right to sell the underlying investment to a
seller of a corresponding put on the same investment during the put period
at a fixed exercise price. Buying a put on an investment the Fund owns
(a "protective put") enables the Fund to attempt to protect itself during
the put period against a decline in the value of the underlying investment
below the exercise price by selling the underlying investment at the
exercise price to a seller of a corresponding put. If the market price
of the underlying investment is equal to or above the exercise price and
as a result the put is not exercised or resold, the put will become
worthless at its expiration and the Fund will lose the premium payment and
the right to sell the underlying investment. However, the put may be sold
prior to expiration (whether or not at a profit).
Puts and calls on broadly-based stock indices or Stock Index Futures
are similar to puts and calls on securities or futures contracts except
that all settlements are in cash and gain or loss depends on changes in
the index in question (and thus on price movements in the stock market
generally) rather than on price movements of individual securities or
futures contracts. When the Fund buys a call on a stock index or Stock
Index Future, it pays a premium. If the Fund exercises the call during
the call period, a seller of a corresponding call on the same investment
will pay the Fund an amount of cash to settle the call if the closing
level of the stock index or Future upon which the call is based is greater
than the exercise price of the call. That cash payment is equal to the
difference between the closing price of the call and the exercise price
of the call times a specified multiple (the "multiplier") which determines
the total dollar value for each point of difference. When the Fund buys
a put on a stock index or Stock Index Future, it pays a premium and has
the right during the put period to require a seller of a corresponding
put, upon the Fund's exercise of its put, to deliver cash to the Fund to
settle the put if the closing level of the stock index or Stock Index
Future upon which the put is based is less than the exercise price of the
put. That cash payment is determined by the multiplier, in the same
manner as described above as to calls.
When the Fund purchases a put on a stock index, or on a Stock Index
Future not owned by it, the put protects the Fund to the extent that the
index moves in a similar pattern to the securities the Fund holds. The
Fund can either resell the put or, in the case of a put on a Stock Index
Future, buy the underlying investment and sell it at the exercise price.
The resale price of the put will vary inversely with the price of the
underlying investment. If the market price of the underlying investment
is above the exercise price, and as a result the put is not exercised, the
put will become worthless on the expiration date. In the event of a
decline in price of the underlying investment, the Fund could exercise or
sell the put at a profit to attempt to offset some or all of its loss on
its portfolio securities.
The Fund's option activities may affect its portfolio turnover rate and
brokerage commissions. The exercise of calls written by the Fund may
cause the Fund to sell related portfolio securities, thus increasing its
turnover rate. The exercise by the Fund of puts on securities will cause
the sale of underlying investments, increasing portfolio turnover.
Although the decision whether to exercise a put it holds is within the
Fund's control, holding a put might cause the Fund to sell the related
investments for reasons that would not exist in the absence of the put.
The Fund will pay a brokerage commission each time it buys or sells a
call, put or an underlying investment in connection with the exercise of
a put or call. Those commissions may be higher than the commissions for
direct purchases or sales of the underlying investments.
Premiums paid for options are small in relation to the market value of
the underlying investments and, consequently, put and call options offer
large amounts of leverage. The leverage offered by trading in options
could result in the Fund's net asset value being more sensitive to changes
in the value of the underlying investments.
- Stock Index Futures. As described in the Prospectus, the Fund may
invest in Stock Index Futures only if they relate to broadly-based stock
indices. A stock index is considered to be broadly-based if it includes
stocks that are not limited to issuers in any particular industry or group
of industries. A stock index assigns relative values to the common stocks
included in the index and fluctuates with the changes in the market value
of those stocks. Stock indices cannot be purchased or sold directly.
Stock index futures are contracts based on the future value of the
basket of securities that comprise the underlying stock index. The
contracts obligate the seller to deliver, and the purchaser to take, cash
to settle the futures transaction or to enter into an offsetting contract.
No physical delivery of the securities underlying the index is made on
settling the futures obligation. No monetary amount is paid or received
by the Fund on the purchase or sale of a Stock Index Future. Upon
entering into a Futures transaction, the Fund will be required to deposit
an initial margin payment, in cash or U.S. Treasury bills, with the
futures commission merchant (the "futures broker"). Initial margin
payments will be deposited with the Fund's Custodian in an account
registered in the futures broker's name; however, the futures broker can
gain access to that account only under certain specified conditions. As
the Future is marked to market (that is, its value on the Fund's books is
changed) to reflect changes in its market value, subsequent margin
payments, called variation margin, will be paid to or by the futures
broker on a daily basis.
At any time prior to the expiration of the Future, the Fund may elect
to close out its position by taking an opposite position, at which time
a final determination of variation margin is made and additional cash is
required to be paid by or released to the Fund. Any gain or loss is then
realized by the Fund on the Future for tax purposes. Although Stock Index
Futures by their terms call for settlement by the delivery of cash, in
most cases the settlement obligation is fulfilled without such delivery
by entering into an offsetting transaction. All futures transactions are
effected through a clearing house associated with the exchange on which
the contracts are traded.
- Regulatory Aspects of Hedging Instruments. The Fund is required to
operate within certain guidelines and restrictions with respect to its use
of futures and options thereon as established by the Commodities Futures
Trading Commission ("CFTC"). In particular, the Fund is excluded from
registration as a "commodity pool operator" if it complies with the
requirements of Rule 4.5 adopted by the CFTC. Under this Rule, the Fund
is not limited regarding the percentage of its assets committed to futures
margins and related options premiums subject to a hedge position.
However, aggregate initial futures margins and related options premiums
are limited to 5% or less of the Fund's net asset value for other than
bona fide hedging strategies employed by the Fund within the meaning and
intent of applicable provisions of the Commodity Exchange Act and CFTC
regulations thereunder.
Transactions in options by the Fund are subject to limitations
established by option exchanges governing the maximum number of options
that may be written or held by a single investor or group of investors
acting in concert, regardless of whether the options were written or
purchased on the same or different exchanges or are held in one or more
accounts or through one or more different exchanges or through one or more
brokers. Thus the number of options which the Fund may write or hold may
be affected by options written or held by other entities, including other
investment companies having the same adviser as the Fund (or an adviser
that is an affiliate of the Fund's adviser). The exchanges also impose
position limits on Futures transactions. An exchange may order the
liquidation of positions found to be in violation of those limits and may
impose certain other sanctions.
Due to requirements under the Investment Company Act, when the Fund
purchases a Stock Index Future, the Fund will maintain, in a segregated
account or accounts with its custodian, cash or readily-marketable, short-
term (maturing in one year or less) debt instruments in an amount equal
to the market value of the securities underlying such Future, less the
margin deposit applicable to it.
- Additional Information About Hedging Instruments and Their Use. The
Fund's Custodian, or a securities depository acting for the Custodian,
will act as the Fund's escrow agent, through the facilities of the Options
Clearing Corporation ("OCC"), as to the investments on which the Fund has
written options traded on exchanges or as to other acceptable escrow
securities, so that no margin will be required for such transactions. OCC
will release the securities on the expiration of the option or upon the
Fund's entering into a closing transaction. An option position may be
closed out only on a market which provides secondary trading for options
of the same series, and there is no assurance that a liquid secondary
market will exist for any particular option.
When the Fund writes an over-the-counter("OTC") option, it will enter
into an arrangement with a primary U.S. Government securities dealer,
which would establish a formula price at which the Fund would have the
absolute right to repurchase that OTC option. That formula price would
generally be based on a multiple of the premium received for the option,
plus the amount by which the option is exercisable below the market price
of the underlying security (that is, the extent to which the option is
"in-the-money"). When the Fund writes an OTC option, it will treat as
illiquid (for purposes of the limit on its assets that may be invested in
the illiquid securities, stated in the Prospectus) the mark-to-market
value of any OTC option held by it. The Securities and Exchange
Commission ("SEC") is evaluating whether OTC options should be considered
liquid securities, and the procedure described above could be affected by
the outcome of that evaluation.
The Fund's option activities may affect its turnover rate and brokerage
commissions. The exercise by the Fund of puts on securities will cause
the sale of related investments, increasing portfolio turnover. Although
such exercise is within the Fund's control, holding a put might cause the
Fund to sell the related investments for reasons which would not exist in
the absence of the put. The Fund will pay a brokerage commission each
time it buys a put or call, sells a call, or buys or sells an underlying
investment in connection with the exercise of a put or call. Such
commissions may be higher than those which would apply to direct purchases
or sales of such underlying investments. Premiums paid for options are
small in relation to the market value of the related investments, and
consequently, put and call options offer large amounts of leverage. The
leverage offered by trading options could result in the Fund's net asset
value being more sensitive to changes in the value of the underlying
investments.
- Tax Aspects of Covered Calls and Hedging Instruments. The Fund
intends to qualify as a "regulated investment company" under the Internal
Revenue Code. That qualification enables the Fund to "pass through" its
income and realized capital gains to shareholders without having to pay
tax on them. This avoids a "double tax" on that income and capital gains,
since shareholders normally will be taxed on the dividends and capital
gains they receive from the Fund (unless the Fund's shares are held in a
retirement account or the shareholder is otherwise exempt from tax). One
of the tests for the Fund's qualification as a regulated investment
company is that less than 30% of its gross income must be derived from
gains realized on the sale of securities held for less than three months.
To comply with this 30% cap, the Fund will limit the extent to which it
engages in the following activities, but will not be precluded from them:
(i) selling investments, including Stock Index Futures, held for less than
three months, whether or not they were purchased on the exercise of a call
held by the Fund; (ii) purchasing options which expire in less than three
months; (iii) effecting closing transactions with respect to calls or puts
written or purchased less than three months previously; (iv) exercising
puts or calls held by the Fund for less than three months; or (v) writing
calls on investments held less than three months.
Certain foreign currency exchange contracts ("Forward Contracts") in
which the Fund may invest are treated as "section 1256 contracts." Gains
or losses relating to section 1256 contracts generally are characterized
under the Internal Revenue Code as 60% long-term and 40% short-term
capital gains or losses. However, foreign currency gains or losses
arising from certain section 1256 contracts (including Forward Contracts)
generally are treated as ordinary income or loss. In addition, section
1256 contracts held by the Fund at the end of each taxable year are
"marked-to-market" with the result that unrealized gains or losses are
treated as though they were realized. These contracts also may be marked-
to-market for purposes of the excise tax applicable to investment company
distributions and for other purposes under rules prescribed pursuant to
the Internal Revenue Code. An election can be made by the Fund to exempt
these transactions from this marked-to-market treatment.
Certain Forward Contracts entered into by the Fund may result in
"straddles" for Federal income tax purposes. The straddle rules may
affect the character of gains (or losses) realized by the Fund on straddle
positions. Generally, a loss sustained on the disposition of a position
making up a straddle is allowed only to the extent such loss exceeds any
unrecognized gain in the offsetting positions making up the straddle.
Disallowed loss is generally allowed at the point where there is no
unrecognized gain in the offsetting positions making up the straddle, or
the offsetting position is disposed of.
Under the Internal Revenue Code, gains or losses attributable to
fluctuations in exchange rates that occur between the time the Fund
accrues interest or other receivables or accrues expenses or other
liabilities denominated in a foreign currency and the time the Fund
actually collects such receivables or pays such liabilities generally are
treated as ordinary income or ordinary loss. Similarly, on disposition
of debt securities denominated in a foreign currency and on disposition
foreign currency forward contracts, gains or losses attributable to
fluctuations in the value of a foreign currency between the date of
acquisition of the security or contract and the date of the disposition
also are treated as an ordinary gain or loss. Currency gains and losses
are offset against market gains and losses on each trade before
determining a net "section 988" gain or loss under the Internal Revenue
Code, which may ultimately increase or decrease the amount of the Fund's
investment company income available for distribution to its
shareholders.
- Additional Risk Factors in Hedging. In addition to the risks with
respect to options discussed in the Prospectus and above, there is a risk
in using short hedging by (i) selling Stock Index Futures or (ii)
purchasing puts on stock indices or Stock Index Futures to attempt to
protect against declines in the value of the Fund's equity securities. The
risk is that the prices of Stock Index Futures will correlate imperfectly
with the behavior of the cash (i.e., market value) prices of the Fund's
equity securities. The ordinary spreads between prices in the cash and
futures markets are subject to distortions, due to differences in the
natures of those markets. First, all participants in the futures markets
are subject to margin deposit and maintenance requirements. Rather than
meeting additional margin deposit requirements, investors may close out
futures contracts through offsetting transactions which could distort the
normal relationship between the cash and futures markets. Second, the
liquidity of the futures markets depends on participants entering into
offsetting transactions rather than making or taking delivery. To the
extent participants decide to make or take delivery, liquidity in the
futures markets could be reduced, thus producing distortion. Third, from
the point of view of speculators, the deposit requirements in the futures
markets are less onerous than margin requirements in the securities
markets. Therefore, increased participation by speculators in the futures
markets may cause temporary price distortions.
The risk of imperfect correlation increases as the composition of the
Fund's portfolio diverges from the securities included in the applicable
index. To compensate for the imperfect correlation of movements in the
price of the equity securities being hedged and movements in the price of
the hedging instruments, the Fund may use hedging instruments in a greater
dollar amount than the dollar amount of equity securities being hedged if
the historical volatility of the prices of the equity securities being
hedged is more than the historical volatility of the applicable index.
It is also possible that if the Fund has used hedging instruments in a
short hedge, the market may advance and the value of equity securities
held in the Fund's portfolio may decline. If that occurred, the Fund would
lose money on the hedging instruments and also experience a decline in
value in its portfolio securities. However, while this could occur for
a very brief period or to a very small degree, over time the value of a
diversified portfolio of equity securities will tend to move in the same
direction as the indices upon which the hedging instruments are based.
If the Fund uses hedging instruments to establish a position in the
equities markets as a temporary substitute for the purchase of individual
equity securities (long hedging) by buying Stock Index Futures and/or
calls on such Futures, on securities or on stock indices, it is possible
that the market may decline. If the Fund then concludes not to invest in
equity securities at that time because of concerns as to a possible
further market decline or for other reasons, the Fund will realize a loss
on the hedging instruments that is not offset by a reduction in the price
of the equity securities purchased.
Other Investment Restrictions
The Fund's most significant investment restrictions are set forth in
the Prospectus. There are additional investment restrictions that the
Fund must follow that are also fundamental policies. Fundamental policies
and the Fund's investment objective cannot be changed without the vote of
a "majority" of the Fund's outstanding voting securities. Under the
Investment Company Act, such a majority vote is defined as the vote of the
holders of the lesser of: (i) 67% or more of the shares present or
represented by proxy at a shareholder meeting, if the holders of more than
50% of the outstanding shares are present or represented by proxy, or (ii)
more than 50% of the outstanding shares.
Under these additional restrictions, the Fund cannot:
- Invest in real estate or interests in real estate (including
limited partnership interests), but may purchase readily marketable
securities of companies holding real estate or interests therein;
- Purchase securities on margin;
- Underwrite securities of other companies, except insofar as it
might be deemed to be an underwriter for purposes of the Securities
Act of 1933 in the resale of any securities held in its own portfolio
(except that the Fund may in the future invest all of its investable
assets in an open-end management investment company with
substantially the same investment objective and restrictions as the
Fund);
- Mortgage, hypothecate or pledge any of its assets;
- Invest or hold securities of any issuer if the Officers and
Directors of the Fund or its Manager or Subadvisor owning
individually more then 1/2 of 1% of the securities of such issuer
together own more than 5% of the securities of such issuer; or
- Invest in companies for the primary purpose of acquiring control
or management thereof (except that the Fund may in the future invest
all of its investable assets in an open-end management investment
company with substantially the same investment objective and
restrictions as the Fund);
- Invest in physical commodities or physical commodity contracts,
or speculate in financial commodity contracts, but may purchase and
sell stock futures contracts and options on such futures contracts
exclusively for hedging purposes;
- Write, purchase or sell puts, calls, or combinations thereof on
individual stocks, but may purchase or sell exchange traded put and
call options on stock indices to protect the Fund's assets.
In addition, the Fund may not, with respect to 75% of its assets,
invest more than 5% of the value of its total assets in the securities of
any one issuer. In connection with the registration of its shares in
certain states, the Fund has made the following undertakings. These
undertakings shall terminate if the Fund ceases to qualify its shares for
sale in that state or if the state's applicable rules or regulations are
amended. The Fund has agreed not to make loans to any person or
individual (except that portfolio securities may be loaned within the
limitations set forth in the Prospectus), not to make short sales of
securities except "against-the-box" and not to invest in interests in oil,
gas or other mineral exploration or development programs or leases.
How the Fund is Managed
Organization and History. Oppenheimer Quest Value Fund, Inc. (referred
to as the "Fund") is organized as a Maryland Corporation. This Statement
of Additional Information may be used with the Fund's Prospectus only to
offer shares of the Fund.
The Directors are authorized to create new series and classes of
series. The Directors may reclassify unissued shares of the Fund or
classes into additional classes of shares. The Directors may also divide
or combine the shares of a class into a greater or lesser number of shares
without thereby changing the proportionate beneficial interest of a
shareholder in the Fund. Shares do not have cumulative voting rights or
preemptive or subscription rights. Shares may be voted in person or by
proxy.
As a Maryland corporation, the Fund is not required to hold, and does
not plan to hold, regular annual meetings of shareholders. The Fund will
hold meetings when required to do so by the Investment Company Act or
other applicable law, or when a shareholder meeting is called by the
Directors or upon proper request of the shareholders. Each share of the
Fund represents an interest in the Fund proportionately equal to the
interest of each other share of the same class and entitles the holder to
one vote per share (and a fractional vote for a fractional share) on
matters submitted to their vote at shareholders' meetings. Shareholders
of the Fund vote together in the aggregate on certain matters at
shareholders' meetings, such as the election of Directors and ratification
of appointment of auditors for the Fund. Shareholders of a particular
class vote separately on proposals which affect that class, and
shareholders of a class which is not affected by that matter are not
entitled to vote on the proposal. For example, only shareholders of a
class of a series vote on certain amendments to the Distribution and/or
Service Plans if the amendments affect that class.
Directors and Officers of the Fund. The Fund's Directors and officers,
and the Fund's portfolio manager (who is not an officer), are listed
below, together with principal occupations and business affiliations
during the past five years. The address of each is Two World Trade
Center, New York, New York 10048, except as noted. All of the Directors
are also directors or trustees of Oppenheimer Quest Global Value Fund,
Inc., Oppenheimer Quest for Value Funds and The Rochester Funds (Rochester
Fund Municipals, Rochester Portfolio Series and Rochester Fund Series).
As of January 25, 1996, the directors and officers of the Fund as a group
owned less than 1% of each class of shares of the Fund. The foregoing
does not include shares held of record by an employee benefit plan for
employees of the Manager for which plan one of the officers listed below,
Mr. Donohue, is a trustee, other than the shares beneficially owned under
that plan by officers of the Fund listed below..
Bridget A. Macaskill, Chairman of the Board of Directors and
President*; Age: 47.
Chief Executive Officer, President and Chief Operating Officer of the
Manager; prior thereto, Chief Operating Officer of the Manager and
Executive Vice President of the Manager. Vice President and a Director
of Oppenheimer Acquisition Corp., Director of Oppenheimer Partnership
Holdings, Inc., Chairman and a Director of Shareholder Services, Inc.
("SSI"), Director of Main Street Advisers, Inc., and Director of
HarbourView Asset Management Corporation ("HarbourView"), all of which are
subsidiaries of the Manager; a Trustee of the New York-based and Denver-
based Oppenheimer funds.
__________________________
* A Director who is an "interested person" as defined in the Investment
Company Act.
Paul Y. Clinton, Director; Age: 64
946 Morris Avenue, Bryn Mawr, Pennsylvania 19010
Director, External Affairs, Kravco Corporation (national real estate owner
and property management); formerly President of Essex Management
Corporation (management consulting company); Trustee of Capital Cash
Management Trust, Prime Cash Fund and Short Term Asset Reserves, each of
which is a money-market fund; Director of Quest Cash Reserves, Inc. and
Trustee of Quest For Value Accumulation Trust, all of which are open-end
investment companies. Formerly: a general partner of Capital Growth Fund
(venture capital partnership); a general partner of Essex Limited
Partnership (investment partnership); President of Geneve Corp. (venture
capital fund); Chairman of Woodland Capital Corp. (small business
investment company); and Vice President of W.R. Grace & Co.
Thomas W, Courtney, Director; Age: 66
P.O. Box 580, Sewickley, Pennsylvania 15143
Principal of Courtney Associates, Inc. (venture capital firm); former
General Partner of Trivest Venture Fund (private venture capital fund);
former President of Investment Counseling Federated Investors, Inc.;
Trustee of Cash Assets Trust, a money market fund; Director of Quest Cash
Reserves, Inc., and Trustee of Quest for Value Accumulation Trust, all of
which are open-end investment companies; former President of Boston
Company Institutional Investors; Trustee of Hawaiian Tax-Free Trust and
Tax Free Trust of Arizona, tax-exempt bond funds; Director of several
privately owned corporations; former Director of Financial Analysts
Federation.
Lacy B. Herrmann, Director; Age: 66
380 Madison Avenue, Suite 2300, New York, New York 10017
President and Chairman of the Board of Aquila Management Corporation, the
sponsoring organization and Administrator and/or Sub-Adviser to the
following open-end investment companies, and Chairman of the Board of
Trustees and President of each: Churchill Cash Reserves Trust, Short Term
Asset Reserves, Pacific Capital Cash Assets Trust, Pacific Capital U.S.
Treasuries Cash Assets Trust, Pacific Capital Tax-Free Cash Assets Trust,
Prime Cash Fund, Narragansett Insured Tax-Free Income Fund, Tax-Free Fund
For Utah, Churchill Tax-Free Fund of Kentucky, Tax-Free Fund of Colorado,
Tax-Free Trust of Oregon, Tax-Free Trust of Arizona, Hawaiian Tax-Free
Trust, and Aquila Rocky Mountain Equity Fund; Vice President, Director,
Secretary, and formerly Treasurer of Aquila Distributors, Inc.,
distributor of the above funds; President and Chairman of the Board of
Trustees of Capital Cash Management Trust ("CCMT"), and an Officer and
Trustee/Director of its predecessors; President and Director of STCM
Management Company, Inc., sponsor and adviser to CCMT; Chairman, President
and a Director of InCap Management Corporation, formerly sub-adviser and
administrator of Prime Cash Fund and Short Term Asset Reserves; Director
of Quest Cash Reserves, Inc., and Trustee of Quest for Value Accumulation
Trust and The Saratoga Advantage Trust, each of which is an open-end
investment company; Trustee of Brown University.
George Loft, Director; Age: 80
51 Herrick Road, Sharon, Connecticut 06069
Private Investor; Director of Quest Cash Reserves, Inc., and Trustee of
Quest for Value Accumulation Trust and The Saratoga Advantage Trust, all
of which are open-end investment companies, and Director of the Quest for
Value Dual Purpose Fund, Inc., a closed-end investment company.
<PAGE>
Robert C. Doll, Jr., Vice President; Age: 41
Executive Vice President and Director of Equity Investments of the
Manager; an officer and Portfolio Manager of other Oppenheimer funds.
Andrew J. Donohue, Secretary; Age: 45
Executive Vice President and General Counsel of the Manager and
OppenheimerFunds Distributor, Inc. (the "Distributor"); an officer of
other Oppenheimer funds; formerly Senior Vice President and Associate
General Counsel of the Manager and the Distributor, partner in Kraft &
McManimon (a law firm), an officer of First Investors Corporation (a
broker-dealer) and First Investors Management Company, Inc. (broker-dealer
and investment adviser), and a director and an officer of First Investors
Family of Funds and First Investors Life Insurance Company.
George C. Bowen, Treasurer; Age: 59
3410 South Galena Street Denver, Colorado 80231
Senior Vice President and Treasurer of the Manager; Vice President and
Treasurer of the Distributor and HarbourView; Senior Vice President,
Treasurer, Assistant Secretary and a director of Centennial Asset
Management Corporation, an investment advisory subsidiary of the Manager;
Vice President, Treasurer and Secretary of OppenheimerFunds Services and
Shareholder Financial Services, Inc. ("SFSI)", a transfer agent subsidiary
of the Manager; an officer of other Oppenheimer funds.
Robert G. Zack, Assistant Secretary; Age: 47
Senior Vice President and Associate General Counsel of the Manager;
Assistant Secretary of SSI and SFSI; an officer of other Oppenheimer
funds.
Robert J. Bishop, Assistant Treasurer; Age: 36
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting; an officer
of other Oppenheimer funds; formerly a Fund Controller for the
Manager, prior to which he was an Accountant for Yale & Seffinger, P.C.,
an accounting firm, and previously an Accountant and Commissions
Supervisor for Stuart James Company Inc., a broker-dealer.
Scott Farrar, Assistant Treasurer; Age: 29
3410 South Galena Street, Denver, Colorado 80231
Assistant Vice President of the Manager/Mutual Fund Accounting, an officer
of other Oppenheimer funds; previously a Fund Controller for the Manager,
prior to which he was an International Mutual Fund Supervisor for Brown
Brothers Harriman & Co. (a bank) and previously a Senior Fund Accountant
for State Street Bank & Trust Company.
Eileen Rominger, Portfolio Manager; Age: 41
Two World Financial Center, 225 Liberty Street, New York, New York 10080
Managing Director of Oppenheimer Capital.
- Remuneration of Directors. All officers of the Fund and Ms.
Macaskill, a Director, are officers or directors of the Manager and
receive no salary or fee from the Fund. The Directors of the Fund
(excluding Ms. Macaskill) received the total amounts shown below from (i)
the Fund during its fiscal year ended October 31, 1995 and (ii) other
investment companies (or series thereof) managed by OpCap Advisors
(previously named Quest for Value Advisors), or an affiliate thereof,
during the fiscal year ended October 31, 1995 (the "Fund Complex"). OpCap
Advisors, or an affiliate thereof, served as the investment adviser to the
Fund Complex prior to November 22, 1995; effective as of such date, the
Manager acquired the investment advisory and other contracts and business
relationships and certain assets and liabilities of OpCap Advisors, Quest
for Value Distributors and Oppenheimer Capital relating to twelve Quest
for Value mutual funds (or series thereof) included in the Fund
Complex.
<TABLE>
<CAPTION>
Pension or
Retirement
Aggregate Benefits Estimated Total
Compensation Accrued as Annual Compensation
from the Part of FundBenefits UponFrom Fund
Name of Person Fund Expenses Retirement Complex
<S> <C> <C> <C> <C>
Paul Y. Clinton $4,200 None None $61,650
Thomas W. Courtney $4,200 None None $60,900
Lacy B. Herrmann $4,200 None None $61,650
George Loft $4,200 None None $61,650
</TABLE>
Messrs. Clinton, Courtney and Herrmann earned directors fees with
respect to 18 investment companies in the Fund Complex and the fees earned
by Mr. Loft were with respect to 19 investment companies in the Fund
Complex. During such period the non-interested Directors received fees
from three investment companies for which they no longer serve as
directors and which are no longer part of the Fund Complex but for which
OpCap Advisors currently serves as subadviser. In addition, during such
periods, Mr. Clinton and Mr. Courtney each served as director with respect
to three investment companies in the Fund Complex for which they received
no fees, and Mr. Loft and Mr. Herrmann each served as director with
respect to 10 investment companies in the Fund Complex for which they
received no fees. For the purpose of this paragraph, a portfolio of an
investment company organized in series form is considered to be an
investment company.
- Major Shareholders. As of January 25, 1996, no person owned of
record or was known by the Fund to own beneficially 5% or more of the
Fund's outstanding Class A, Class B or Class C shares except: Unified
Advisors, Inc. Omnibus Account, Attn: Control Group, 429 N. Pennsylvania
St., Indianapolis, Indiana 46204-1873 which held of record for the benefit
of clients 3,118,193.013 Class A shares, representing approximately 15.0%
of the outstanding Class A Shares of such date.
The Manager and its Affiliates. The Manager is wholly-owned by
Oppenheimer Acquisition Corp. ("OAC"), a holding company controlled by
Massachusetts Mutual Life Insurance Company. OAC is also owned in part
by certain of the Manager's directors and officers, some of whom also
serve as officers of the Fund and one of whom (Ms. Macaskill) also serves
as a Director of the Fund.
The Manager and the Fund have a Code of Ethics. In addition to
having its own Code of Ethics, the Sub-Adviser is subject to a reporting
obligation to the Manager under this Code of Ethics. The Code of Ethics
is designed to detect and prevent improper personal trading by certain
employees, including the Fund's portfolio manager, who is an employee of
the Sub-Adviser, that would compete with or take advantage of the Funds'
portfolio transactions. Compliance with the Code of Ethics is carefully
monitored and strictly enforced by the Manager.
- The Investment Advisory Agreement. The Manager acts as investment
adviser to the Fund pursuant to the terms of an Investment Advisory
Agreement dated as of November 22, 1995. The Sub-Adviser previously served
as the Fund's investment adviser since the Fund's inception (April 30,
1980) to November 22, 1995.
Under the Investment Advisory Agreement, the Manager acts as the
investment adviser for the Fund and supervises the investment program of
the Fund. The Investment Advisory Agreement provides that the Manager
will provide administrative services for the Fund, including completion
and maintenance of records, preparation and filing of reports required by
the Securities and Exchange Commission, reports to shareholders, and
composition of proxy statements and registration statements required by
Federal and state securities laws. The Manager will furnish the Fund with
office space, facilities and equipment and arrange for its employees to
serve as officers of the Fund. The administrative services to be provided
by the Manager under the Investment Advisory Agreement will be at its own
expense, except that each class of shares of the Fund will pay the Manager
an annual fee for calculating the Fund's daily net asset value as follows:
Class A - $25,000; Class B - $18,000; and Class C - $12,000.
Expenses not assumed by the Manager under the Investment Advisory
Agreement or paid by the Distributor under the General Distributor's
Agreement will be paid by the Fund. Expenses with respect to the Fund's
four portfolios, including the Fund, are allocated in proportion to the
net assets of the respective portfolio, except where allocations of direct
expenses could be made. Certain expenses are further allocated to certain
classes of shares of a series as explained in the Prospectus and under
"How to Buy Shares," below. The Investment Advisory Agreement lists
examples of expenses paid by the Fund, including interest, taxes,
brokerage commissions, insurance premiums, fees of non-interested
Directors, legal and audit expenses, transfer agent and custodian
expenses, share issuance costs, certain printing and registration costs,
and non-recurring expenses, including litigation.
The Investment Advisory Agreement contains no expense limitation.
However, independently of the Investment Advisory Agreement, the Manager
has voluntarily undertaken that the Fund's total expenses in any fiscal
year (including the investment advisory fee but exclusive of taxes,
interest, brokerage commissions, distribution plan payments and any
extraordinary non-recurring expenses, including litigation) shall not
exceed the most stringent state regulatory limitation application to the
Fund. At present, that limitation is imposed by California and limits
expenses (with specified exclusions) to 2.5% of the first $30 million of
average annual net assets, 2% of the next $70 million and 1.5% of average
annual net assets in excess of $100 million.
Pursuant to the undertaking, the Manager's fee at the end of any
month will be reduced or eliminated such that there will not be any
accrued but unpaid liability under this expense limitation. The Manager
reserves the right to terminate or amend the undertaking at any time. Any
assumption of the Fund's expenses under this undertaking would lower the
Fund's overall expense ratio and increase its total return during any
period in which expenses are limited.
The Investment Advisory Agreement provides that in the absence of
willful misfeasance, bad faith, or gross negligence in the performance of
its duty, or reckless disregard for its obligations and duties under the
advisory agreement, the Manager is not liable for any loss resulting from
good faith errors or omissions on its part with respect to any of its
duties thereunder. The Investment Advisory Agreement permits the Manager
to act as investment adviser for any other person, firm or corporation and
to use the name "Oppenheimer" in connection with its other investment
companies for which it may act as an investment adviser or general
distributor. If the Manager shall no longer act as investment adviser to
a Fund, the right of the Fund to use "Oppenheimer" as part of its name may
be withdrawn.
The Investment Advisory Agreement provides that the Manager may enter
into sub-advisory agreements with other affiliated or unaffiliated
registered investment advisers in order to obtain specialized services for
the Funds provided that the Fund is not required to pay any additional
fees for such services. The Manager has retained OpCap Advisors
(previously named Quest for Value Advisors) pursuant to a separate
Subadvisory Agreement, dated as of November 22, 1995, with respect to the
Fund as described below.
- Fees Paid Under the Prior Investment Advisory Agreement. The Sub-
Adviser served as investment adviser to the Fund from the inception of the
Fund (April 30, 1980) until November 22, 1995. Under the prior Investment
Advisory Agreement, the total advisory fees accrued or paid by the Fund
were $2,052,883 for the fiscal year ended October 31, 1993, $2,479,887 for
the fiscal year ended October 31, 1994, and $2,893,435 for the fiscal year
ended October 31, 1995.
- - The Subadvisory Agreement. The Subadvisory Agreement provides that
OpCap Advisors shall regularly provide investment advice with respect to
the Fund and invest and reinvest cash, securities and the property
comprising the assets of the Fund. Under the Subadvisory Agreement, OpCap
Advisors agrees not to change the Portfolio Manager of the Fund without
the written approval of the Manager and to provide assistance in the
distribution and marketing of the Fund. The Subadvisory Agreement was
approved by the Board of Directors, including a majority of the Directors
who are not "interested persons" of the Fund (as defined in the Investment
Company Act) and who have no direct or indirect financial interest in such
agreements, on June 22, 1995 and by the shareholders of the Fund at a
meeting held for that purpose on November 3, 1995.
Under the Subadvisory Agreement, the Manager will pay OpCap Advisors
an annual fee payable monthly, based on the average daily net assets of
the Fund, equal to 40% of the investment advisory fee collected by the
Manager from the Fund based on the total net assets of the Fund as of the
effective date of the Subadvisory Agreement (the "base amount") plus 30%
of the investment advisory fee collected by the Manager based on the total
net assets of the Fund that exceed the base amount.
The Subadvisory Agreement provides that in the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its duties or
obligations, OpCap Advisors shall not be liable to the Manager for any act
or omission in the course of or connected with rendering services under
the Subadvisory Agreement or for any losses that may be sustained in the
purchase, holding or sale of any security.
- The Distributor. Under a General Distributor's Agreement with the
Fund dated as of November 22, 1995, the Distributor acts as the Fund's
principal underwriter in the continuous public offering of its Class A,
Class B and Class C shares of the Fund but is not obligated to sell a
specific number of shares. Expenses normally attributable to sales,
including advertising and the cost of printing and mailing prospectuses,
other than those furnished to existing shareholders, are borne by the
Distributor. During the Fund's fiscal years ended October 31, 1993, 1994
and 1995, the aggregate amount of sales charges on sales of the Fund's
Class A shares was $855,000, $344,000 and $390,000, respectively, none of
which was retained by Quest for Value Distributors, the Fund's distributor
prior to November 22, 1995, or an affiliated broker-dealer. During the
fiscal years ended October 31, 1993, 1994 and 1995, Quest for Value
Distributors received contingent deferred sales charges of $0, $10,181 and
$53,128, respectively, upon redemption of Class B shares, and received $0,
$11 and $4,305, respectively, upon redemption of Class C shares. For
additional information about distribution of the Fund's shares and the
expenses connected with such activities, please refer to "Distribution and
Service Plans" below.
- The Transfer Agent. OppenheimerFunds Services acts as the Fund's
Transfer Agent pursuant to a Transfer Agency and Service Agreement dated
November 22, 1995. Pursuant to the Agreement, the Transfer Agent is
responsible for maintaining the Fund's shareholder registry and
shareholder accounting records, and for shareholder servicing and
administrative functions. As compensation therefor, the Fund is obligated
to pay the Transfer Agent an annual maintenance fee for each Fund
shareholder account and reimburse the Transfer Agent for its out of pocket
expenses.
- Shareholder Servicing Agent for Certain Shareholders. Unified
Management Corporation (1-800-346-4601) is the shareholder servicing agent
of the Fund for former shareholders of the AMA Family of Funds and clients
of AMA Investment Advisers, Inc. (which had been the investment adviser
of AMA Family of Funds) who acquire shares of any Oppenheimer Quest Fund,
and for (i) former shareholders of the Unified Funds and Liquid Green
Trusts, (ii) accounts which participated or participate in a retirement
plan for which Unified Investment Advisers, Inc. or an affiliate acts as
custodian or trustee, (iii) accounts which have a Money Manager brokerage
account, and (iv) other accounts for which Unified Management Corporation
is the dealer of record.
Brokerage Policies of the Fund
Brokerage Provisions of the Investment Advisory and Subadvisory
Agreement. The Investment Advisory Agreement contains provisions relating
to the selection of broker-dealers ("brokers") for the Fund's portfolio
transactions. The Manager and the Sub-Adviser may use such brokers as
may, in their best judgment based on all relevant factors, implement the
policy of the Fund to achieve best execution of portfolio transactions.
While the Manager need not seek advance competitive bidding or base its
selection on posted rates, it is expected to be aware of the current rates
of most eligible brokers and to minimize the commissions paid to the
extent consistent with the interests and policies of the Fund as
established by its Board and the provisions of the Investment Advisory
Agreement.
The Investment Advisory Agreement also provides that, consistent with
obtaining the best execution of the Fund's portfolio transactions, the
Manager and the Sub-Adviser, in the interest of the Fund, may select
brokers other than affiliated brokers, because they provide brokerage
and/or research services to the Fund and/or other accounts of the Manager
or the Sub-Adviser. The commissions paid to such brokers may be higher
than another qualified broker would have charged if a good faith
determination is made by the Manager or the Sub-Adviser that the
commissions are reasonable in relation to the services provided, viewed
either in terms of that transaction or the Manager's or the Sub-Adviser's
overall responsibilities to all its accounts. No specific dollar value
need be put on the services, some of which may or may not be used by the
Manager or the Sub-Adviser for the benefit of the Fund or other of its
advisory clients. To show that the determinations were made in good
faith, the Manager or any Sub-Adviser must be prepared to show that the
amount of such commissions paid over a representative period selected by
the Board was reasonable in relation to the benefits to the Fund. The
Investment Advisory Agreement recognizes that an affiliated broker-dealer
may act as one of the regular brokers for the Fund provided that any
commissions paid to such broker are calculated in accordance with
procedures adopted by the Fund's Board under applicable rules of the
Securities and Exchange Commission ("SEC").
In addition, the Subadvisory Agreement permits the Sub-Adviser to
enter into soft dollar arrangements through the agency of third parties
to obtain services for the Fund. Pursuant to these arrangements, the
Sub-Adviser will undertake to place brokerage business with broker-dealers
who pay third parties that provide services. Any such soft dollar
arrangements will be made in accordance with policies adopted by the Board
of the Fund and in compliance with applicable law.
Description of Brokerage Practices. Portfolio decisions are based upon
recommendations of the portfolio manager and the judgment of the portfolio
managers. The Fund will pay brokerage commissions on transactions in
listed options and equity securities. Prices of portfolio securities
purchased from underwriters of new issues include a commission or
concession paid by the issuer to the underwriter, and prices of debt
securities purchased from dealers include a spread between the bid and
asked prices.
Transactions may be directed to dealers during the course of an
underwriting in return for their brokerage and research services, which
are intangible and on which no dollar value can be placed. There is no
formula for such allocation. The research information may or may not be
useful to one or more of the Fund and/or other accounts of the Manager or
the Sub-Adviser; information received in connection with directed orders
of other accounts managed by the Manager or the Sub-Adviser or its
affiliates may or may not be useful to one or more of the Funds. Such
information may be in written or oral form and includes information on
particular companies and industries as well as market, economic or
institutional activity areas. It serves to broaden the scope and
supplement the research activities of the Manager or the Sub-Adviser, to
make available additional views for consideration and comparison, and to
enable the Manager or the Sub-Adviser to obtain market information for the
valuation of securities held in the Fund's assets.
Sales of shares of the Fund, subject to applicable rules covering the
Distributor's activities in this area, will also be considered as a factor
in the direction of portfolio transactions to dealers, but only in
conformity with the price, execution and other considerations and
practices discussed above. The Fund will not purchase any securities from
or sell any securities to an affiliated broker-dealer including
Oppenheimer & Co., Inc. ("Opco"), an affiliate of the Sub-Adviser, acting
as principal for its own account.
The Sub-Adviser currently serves as investment manager to a number
of clients, including other investment companies, and may in the future
act as investment manager or advisor to others. It is the practice of the
Sub-Adviser to cause purchase or sale transactions to be allocated among
the Fund and others whose assets it manages in such manner as it deems
equitable. In making such allocations among the Fund and other client
accounts, the main factors considered are the respective investment
objectives, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment, the size
of investment commitments generally held and the opinions of the persons
responsible for managing the portfolios of each Fund and other client
accounts.
When orders to purchase or sell the same security on identical terms
are placed by more than one of the funds and/or other advisory accounts
managed by the Sub-Adviser or its affiliates, the transactions are
generally executed as received, although a fund or advisory account that
does not direct trades to a specific broker ("free trades") usually will
have its order executed first. Purchases are combined where possible for
the purpose of negotiating brokerage commissions, which in some cases
might have a detrimental effect on the price or volume of the security in
a particular transaction as far as the Fund is concerned. Orders placed
by accounts that direct trades to a specific broker will generally be
executed after the free trades. All orders placed on behalf of the Fund
are considered free trades. However, having an order placed first in the
market does not necessarily guarantee the most favorable price.
The following table presents information as to the allocation of
brokerage commissions paid by the Fund for the fiscal years ended October
31, 1993, 1994 and 1995:
<TABLE>
<CAPTION>
For the Total Brokerage CommissionsTotal Amount of Transactions
Fiscal Year Brokerage Paid to Opco Where Brokerage Commissions
Ended Commissions Dollar Paid to Opco
October 31, Paid Amounts % Dollar Amounts %
<S> <C> <C> <C> <C> <C>
1993 $152,344 $73,313 48.1% $ 58,028,142 55.2%
1994 $318,014 $162,914 51.2% $103,314,410 53.2%
1995 $309,310 $156,970 50.7% $ 99,572,945 52.1%
</TABLE>
During the Fund's fiscal year ended October 31, 1995, $11,538 was
paid by the Fund to brokers as commissions in return for research
services; the aggregate dollar amount of those transactions was
$7,177,056.
Performance of the Fund
Total Return Information. As described in the Prospectus, from time
to time the "average annual total return," "cumulative total return" and
"total return at net asset value" of an investment in a class of shares
of the Fund may be advertised. An explanation of how these total returns
are calculated for each class and the components of those calculations is
set forth below.
The Fund's advertisements of its performance data must, under
applicable rules of the SEC, include the average annual total returns for
each class of shares of the Fund for the 1, 5, and 10-year periods (or
the life of the class, if less) ending as of the most recently-ended
calendar quarter prior to the publication of the advertisement. This
enables an investor to compare the Fund's performance to the performance
of other funds for the same periods. However, a number of factors should
be considered before using such information as a basis for comparison with
other investments. An investment in the Fund is not insured; its returns
and share prices are not guaranteed and normally will fluctuate on a daily
basis. When redeemed, an investor's shares may be worth more or less than
their original cost. Returns for any given past period are not a
prediction or representation by the Fund of future returns. The returns
of Class A, Class B and Class C shares of the Fund are affected by
portfolio quality, the type of investments the Fund holds and its
operating expenses allocated to the particular class.
- Average Annual Total Returns. The "average annual total return"
of each class is an average annual compounded rate of return for each year
in a specified number of years. It is the rate of return based on the
change in value of a hypothetical initial investment of $1,000 ("P" in the
formula below) held for a number of years ("n") to achieve an Ending
Redeemable Value ("ERV") of that investment, according to the following
formula:
(ERV)1/n
(___) -1 = Average Annual Total Return
( P )
The "average annual total returns" on an investment in Class A shares
of the Fund (using the method described above) for the one, five and ten
year periods ended October 31, 1995 and for the period from April 30, 1980
(commencement of operations) to October 31, 1995 were 17.57%, 17.76%,
12.54% and 18.04%, respectively.
The average annual total return on Class B shares for the one-year
period ended October 31, 1995 and for the period September 2, 1993
(commencement of the public offering of the class) through October 31,
1995 were 19.08% and 10.87%, respectively.
The average annual total return on Class C shares for the one-year
period ended October 31, 1995 and for the period September 2, 1993
(commencement of the public offering of the class) through October 31,
1995 were 23.10% and 12.06%, respectively.
- Cumulative Total Returns. The cumulative "total return"
calculation measures the change in value of a hypothetical investment of
$1,000 over an entire period of years. Its calculation uses some of the
same factors as average annual total return, but it does not average the
rate of return on an annual basis. Cumulative total return is determined
as follows:
ERV - P
_______ = Total Return
P
In calculating total returns for Class A shares, the current maximum
sales charge of 5.75% (as a percentage of the offering price) is deducted
from the initial investment ("P") (unless the return is shown at net asset
value, as described below). Prior to November 24, 1995, the maximum
initial sales charge on Class A shares was 5.50%. For Class B shares, the
payment of the applicable contingent deferred sales charge (5% for the
first year, 4% for the second year, 3% for the third and fourth years, 2%
for the fifth year, 1% for the sixth year, and none thereafter) is applied
to the investment result for the period shown (unless the total return is
shown at net asset value, as described below). For Class C shares, the
1.0% contingent deferred sales charge is applied to the investment result
for the one-year period (or less). Total returns also assume that all
dividends and capital gains distributions during the period are reinvested
to buy additional shares at net asset value per share, and that the
investment is redeemed at the end of the period.
The "cumulative total return" on Class A shares for the period from
April 30, 1980 (commencement of operations) to October 31, 1995 was
1,208.74%. The cumulative total return on Class B shares for the period
from September 2, 1993 (commencement of the public offering of the class)
through October 31, 1995 was 25.05%. The cumulative total return on Class
C shares for the period from September 2, 1993 (commencement of the public
offering of the class) through October 31, 1995 was 27.98%.
- Total Returns at Net Asset Value. From time to time the Fund may
also quote an "average annual total return at net asset value" or a
"cumulative total return at net asset value" for Class A, Class B or Class
C shares. Each is based on the difference in net asset value per share
at the beginning and the end of the period for a hypothetical investment
in that class of shares (without considering front-end or contingent
deferred sales charges) and takes into consideration the reinvestment of
dividends and capital gains distributions.
The average annual total returns at net asset value on the Fund's
Class A shares for the one, five and ten year periods ended October 31,
1995 and for the period from April 30, 1980 (commencement of operations)
to October 31, 1995 were 24.74%, 19.16%, 13.21%, and 18.50%, respectively.
The cumulative total return at net asset value on the Fund's Class A
shares for the period from April 30, 1980 (commencement of operations)
through October 31, 1995 was 1,288.62%.
The average annual total returns at net asset value on the Fund's
Class B shares for the one year period ended October 31, 1995 and for the
period from September 2, 1993 (commencement of the public offering of the
class) through October 31, 1995 were 24.08% and 12.09%, respectively. The
cumulative total return at net asset value on the Fund's Class B shares
for the period September 2, 1993 (commencement of the public offering of
the class) through October 31, 1995 was 28.05%.
The average annual total returns at net asset value on the Fund's
Class C shares for the one-year period ended October 31, 1995 and for the
period September 2, 1993 (commencement of the public offering of the
class) through October 31, 1995 were 24.10% and 12.06%, respectively. The
cumulative total return at net asset value on the Fund's Class C shares
for the period September 2, 1993 (commencement of the public offering of
the class) through October 31, 1995 was 27.98%.
Other Performance Comparisons. From time to time the Fund may publish
the ranking of its Class A, Class B or Class C shares by Lipper Analytical
Services, Inc. ("Lipper"), a widely-recognized independent mutual fund
monitoring service. Lipper monitors the performance of regulated
investment companies, including the Fund, and ranks their performance for
various periods based on categories relating to investment objectives.
The performance of the Fund is ranked against (i) all other funds, (ii)
all other capital appreciation funds and (iii) all other capital
appreciation funds in a specific size category. The Lipper performance
rankings are based on total returns that include the reinvestment of
capital gain distributions and income dividends but do not take sales
charges or taxes into consideration.
From time to time the Fund may publish the ranking of the performance
of its Class A, Class B or Class C shares by Morningstar, Inc., an
independent mutual fund monitoring service that ranks mutual funds,
including the Fund, monthly in broad investment categories (equity,
taxable bond, municipal bond and hybrid) based on risk-adjusted investment
return. Investment return measures a fund's three, five and ten-year
average annual total returns (when available) in excess of 90-day U.S.
Treasury bill returns after considering sales charges and expenses. Risk
measures fund performance below 90-day U.S. Treasury bill monthly returns.
Risk and investment return are combined to produce star rankings
reflecting performance relative to the average fund in a fund's category.
Five stars is the "highest" ranking (top 10%), four stars is "above
average" (next 22.5%), three stars is "average" (next 35%), two stars is
"below average" (next 22.5%) and one star is "lowest" (bottom 10%).
Morningstar ranks the Fund in relation to other rated capital appreciation
funds. Rankings are subject to change.
The total return on an investment in the Fund's Class A, Class B or
Class C shares may be compared with performance for the same period of the
S&P 500 Index as described in the Prospectus. The performance of the
index includes a factor for the reinvestment of income dividends, but does
not reflect reinvestment of capital gains, expenses or taxes.
The performance of the Fund's Class A, Class B, or Class C shares may
also be compared in publications to (i) the performance of various market
indices or to other investments for which reliable performance data is
available, and (ii) to averages, performance rankings or other benchmarks
prepared by recognized mutual fund statistical services.
Investors may also wish to compare the Fund's Class A, Class B or
Class C return to the returns on fixed income investments available from
banks and thrift institutions, such as certificates of deposit, ordinary
interest-paying checking and savings accounts, and other forms of fixed
or variable time deposits, and various other instruments such as Treasury
bills. However, the Fund's returns and share price are not guaranteed by
the FDIC or any other agency and will fluctuate daily, while bank
depository obligations may be insured by the FDIC and may provide fixed
rates of return, and Treasury bills are guaranteed as to principal and
interest by the U.S. government.
From time to time, the Fund's Manager may publish rankings or ratings
of the Manager (or Transfer Agent) or the investor services provided by
them to shareholders of the Oppenheimer funds, other than performance
rankings of the Oppenheimer funds themselves. Those ratings or rankings
of shareholder/investor services by third parties may compare the
Oppenheimer funds' services to those of other mutual fund families
selected by the rating or ranking services and may be based upon the
opinions of the rating or ranking service itself, based on its research
or judgment, or based upon surveys of investors, brokers, shareholders or
others.
Distribution and Service Plans
The Fund has adopted separate Amended and Restated Distribution and
Service Plans and Agreements for Class A, Class B and Class C shares of
the Fund under Rule 12b-1 of the Investment Company Act pursuant to which
the Fund will compensate the Distributor for all or a portion of its costs
incurred in connection with the distribution and/or servicing of the
shares of that class, as described in the Prospectus. Each Plan has been
approved by a vote of (i) the Board of Directors of the Fund, including
a majority of the Directors who are not "interested persons" (as defined
in the Investment Company Act) of the Fund and who have no direct or
indirect financial interest in the operation of the Fund's 12b-1 plans or
in any related agreement ("Independent Directors"), cast in person at a
meeting on June 22, 1995 called for the purpose, among others, of voting
on that Plan, and (ii) the holders of a "majority" (as defined in the
Investment Company Act) of the shares of each class at a meeting on
November 3, 1995.
In addition, under the Plans the Manager and the Distributor, in
their sole discretion, from time to time may use their own resources
(which, in the case of the Manager, may include profits from the advisory
fee it receives from the Fund) to make payments to brokers, dealers or
other financial institutions (each is referred to as a "Recipient" under
the Plans) for distribution and administrative services they perform. The
Distributor and the Manager may, in their sole discretion, increase or
decrease the amount of payments they make from their own resources to
Recipients.
Unless terminated as described below, each plan continues in effect
from year to year but only as long as such continuance is specifically
approved at least annually by the Fund's Board of Directors and its
"Independent Directors" by a vote cast in person at a meeting called for
the purpose of voting on such continuance. Any Plan may be terminated at
any time by the vote of a majority of the Independent Directors or by the
vote of the holders of a "majority" (as defined in the Investment Company
Act) of the outstanding shares of that class. No Plan may be amended to
increase materially the amount of payments to be made unless such
amendment is approved by shareholders of the class affected by the
amendment. In addition, because Class B shares of the Fund automatically
convert into Class A shares after six years, (or after eight years if they
were purchased prior to November 24, 1995), the Fund is required to obtain
the approval of Class B as well as Class A shareholders for a proposed
material amendment to the Class A Plan that would materially increase
payments under the Plan. Such approval must be by a "majority" of the
Class A and Class B shares (as defined in the Investment Company Act),
voting separately by class. All material amendments must be approved by
the Board of Directors and the Independent Directors.
While the Plans are in effect, the Treasurer of the Fund shall
provide separate written reports to the Fund's Board of Directors at least
quarterly on the amount of all payments made pursuant to each Plan, the
purpose for which the payments were made and the identity of each
Recipient that received any such payment. The reports shall also include
the distribution costs for that quarter, and such costs for previous
fiscal periods that are carried forward, as explained in the Prospectus
and below. Those reports, including the allocations on which they are
based, will be subject to the review and approval of the Independent
Directors in the exercise of their fiduciary duty. Each Plan further
provides that while it is in effect, the selection and nomination of those
Directors of the Fund who are not "interested persons" of the Fund is
committed to the discretion of the Independent Directors. This does not
prevent the involvement of others in such selection and nomination if the
final decision on any such selection or nomination is approved by a
majority of the Independent Directors.
Under the Plans, no payment will be made to any Recipient in any
quarter if the aggregate net asset value of all Fund shares held by the
Recipient for itself and its customers did not exceed a minimum amount,
if any, that may be determined from time to time by a majority of the
Fund's Independent Directors. Initially, the Board of Directors has set
the fee at the maximum rate and set no requirement for a minimum amount.
The Plans allow the service fee payments to be paid by the
Distributor to Recipients in advance for the first year Class B and Class
C shares are outstanding, and thereafter on a quarterly basis, as
described in the Prospectus. The advance payment is based on the net
assets of the Class A, Class B and Class C shares sold. An exchange of
shares does not entitle the Recipient to an advance service fee payment.
In the event Class A, Class B or Class C shares are redeemed during the
first year such shares are outstanding, the Recipient will be obligated
to repay a pro rata portion of such advance payment to the Distributor.
Although the Plans permit the Distributor to retain both the asset-
based sales charge and the service fee, or to pay Recipients the service
fee on a quarterly basis, without payment in advance, the Distributor
presently intends to pay the service fee to Recipients in the manner
described above. A minimum holding period may be established from time
to time under the Plans by the Board. Initially, the Board has set no
minimum holding period. All payments under the Plans are subject to the
limitations imposed by the Rules of Fair Practice of the National
Association of Securities Dealers, Inc. on payments of asset-based sales
charges and service fees.
The Plans provide for the Distributor to be compensated at a flat
rate, whether the Distributor's expenses are more or less than the amounts
paid by the Fund during that period. The asset-based sales charges paid
to the Distributor by the Fund under the Plans are intended to allow the
Distributor to recoup the cost of sales commissions paid to authorized
brokers and dealers at the time of sale, plus financing costs, as
described in the Prospectus. Such payments may also be used to pay for
the following expenses in connection with the distribution of shares: (i)
financing the advance of the service fee payment to Recipients under the
Plan, (ii) compensation and expenses of personnel employed by the
Distributor to support distribution of shares, and (iii) costs of sales
literature, advertising and prospectuses (other than those furnished to
current shareholders).
- The Prior Plans. From the inception date of the Fund (on April 30,
1980) through to and including November 22, 1995, OpCap Distributors
(formerly known as Quest for Value Distributors) served as Distributor to
the Fund. OpCap Distributors provided distribution services for the
Fund's Class A, Class B and Class C shares pursuant to separate plans
adopted for each class under the Investment Company Act (the "Prior
Plans"). The total distribution fees accrued or paid by Class A, Class
B and Class C shares of the Fund under the Prior Plans for the fiscal year
ended October 31, 1995 were $1,286,200, $253,926 and $6,710,
respectively.
ABOUT YOUR ACCOUNT
How To Buy Shares
Alternative Sales Arrangements - Class A, Class B and Class C Shares.
The availability of three classes of shares permits the individual
investor to choose the method of purchasing shares that is more beneficial
to the investor depending on the amount of the purchase, the length of
time the investor expects to hold shares and other relevant circumstances.
Investors should understand that the purpose and function of the deferred
sales charge and asset-based sales charge with respect to Class B and
Class C shares are the same as those of the initial sales charge with
respect to Class A shares. Any salesperson or other person entitled to
receive compensation for selling Fund shares may receive different
compensation with respect to one class of shares than another. The
Distributor will not accept any order for $500,000 or $1 million or more
of Class B or Class C shares, respectively, on behalf of a single investor
(not including dealer "street name" or omnibus accounts) because generally
it will be more advantageous for that investor to purchase Class A shares
of the Fund instead.
The three classes of shares each represent an interest in the same
portfolio investments of the Fund. However, each class has different
shareholder privileges and features. The net income attributable to Class
B and Class C shares and the dividends payable on Class B and Class C
shares will be reduced by incremental expenses borne solely by that class,
respectively, including the asset-based sales charges to which Class B and
Class C shares are subject.
The conversion of Class B shares to Class A shares is subject to the
continuing availability of a private letter ruling from the Internal
Revenue Service, or an opinion of counsel or tax adviser, to the effect
that the conversion of Class B shares does not constitute a taxable event
for the holder under Federal income tax law. If such a revenue ruling or
opinion is no longer available, the automatic conversion feature may be
suspended, in which event no further conversions of Class B shares would
occur while such suspension remained in effect. Although Class B shares
could then be exchanged for Class A shares on the basis of relative net
asset value of the two classes, without the imposition of a sales charge
or fee, such exchange could constitute a taxable event for the holder, and
absent such exchange, Class B shares might continue to be subject to the
asset-based sales charge for longer than six years.
The methodology for calculating the net asset value, dividends and
distributions of the Fund's Class A, Class B and Class C shares recognizes
two types of expenses. General expenses that do not pertain specifically
to either class are allocated pro rata to the shares of each class, based
on the percentage of the net assets of such class to the Fund's total
assets, and then equally to each outstanding share within a given class.
Such general expenses include (i) management fees, (ii) legal, bookkeeping
and audit fees, (iii) printing and mailing costs of shareholder reports,
Prospectuses, Statements of Additional Information and other materials for
current shareholders, (iv) fees to Independent Directors, (v) custodian
expenses, (vi) share issuance costs, (vii) organization and start-up
costs, (viii) interest, taxes and brokerage commissions, and (ix) non-
recurring expenses, such as litigation costs. Other expenses that are
directly attributable to a class are allocated equally to each outstanding
share within that class. Such expenses include (i) Distribution Plan
fees, (ii) incremental transfer and shareholder servicing agent fees and
expenses, (iii) registration fees and (iv) shareholder meeting expenses,
to the extent that such expenses pertain to a specific class rather than
to the Fund as a whole.
Determination of Net Asset Values Per Share. The Fund's Board of
Directors has established procedures for the valuation of the Fund's
securities generally as follows: (i) equity securities traded on a
securities exchange or on the NASDAQ for which last sale information is
regularly reported are valued at the last sales prices on their primary
exchange or the NASDAQ that day (or, in the absence of sales that day, at
values based on the last sale prices of the preceding trading day or
closing bid and asked prices); (ii) securities actively traded on a
foreign securities exchange are valued at the last sales price available
to the pricing service approved by the Fund's Board of Directors or to the
Manager as reported by the principal exchange on which the security is
traded; (iii) unlisted foreign securities or listed foreign securities not
actively traded are valued as in (i) above, if available, or at the mean
between "bid" and "asked" prices obtained from active market makers in the
security on the basis of reasonable inquiry; (iv) long-term debt
securities having a remaining maturity in excess of 60 days are valued at
the mean between the "bid" and "asked" prices determined by a portfolio
pricing service approved by the Fund's Board of Directors or obtained from
active market makers in the security on the basis of reasonable inquiry;
(v) debt instruments having a maturity of more than one year when issued,
and non-money market type instruments having a maturity of one year or
less when issued, which have a remaining maturity of 60 days or less are
valued at the mean between the "bid" and "asked" prices determined by a
pricing service approved by the Fund's Board of Directors or obtained from
active market makers in the security on the basis of reasonable inquiry;
(vi) money market-type debt securities having a maturity of less than one
year when issued that having a remaining maturity of 60 days or less are
valued at cost, adjusted for amortization of premiums and accretion of
discounts; (vii) securities (including restricted securities) not having
readily-available market quotations are valued at fair value under the
Board's procedures; and (viii) securities traded on foreign exchanges are
valued at the closing or last sales prices reported on a principal
exchange, or, if none, at the mean between closing bid and asked prices
and reflect prevailing rates of exchange taken from the closing price on
the London foreign exchange market that day.
Trading in securities on European and Asian exchanges and over-the-
counter markets is normally completed before the close of the Exchange.
Events affecting the values of foreign securities that occur between the
time their prices are determined and the close of the Exchange will not
be reflected in the Fund's calculation of net asset value unless the Board
of Directors or the Manager, under procedures established by the Board of
Directors, determines that the particular event would materially affect
net asset value, in which case an adjustment would be made. Foreign
currency, including forward contracts, will be valued at the closing price
in the London foreign exchange market that day as provided by a reliable
bank, dealer or pricing service. The value of securities denominated in
foreign currency will be converted to U.S. dollars at the closing price
in the London foreign exchange market that day as provided by a reliable
bank, dealer or pricing service.
In the case of Municipal Securities, U.S. Government securities and
corporate bonds, where last sale information is not generally available,
such pricing procedures may include "matrix" comparisons to the prices for
comparable instruments on the basis of quality, yield, maturity and other
special factors involved (such as the tax-exempt status of the interest
paid by Municipal Securities). With the approval of the Fund's Board of
Directors, the Manager may employ a pricing service, bank or broker-dealer
experienced in such matters to price any of the types of securities
described above. The Directors will monitor the accuracy of pricing
services by comparing prices used for portfolio evaluation to actual sales
prices of selected securities.
The Fund values puts, calls and Futures at the last sales price on
the principal exchange or on the NASDAQ on which they are traded. If
there were no sales on the principal exchange, the last sale or any
exchange is used. In the absence of any sales that day, value shall be
the last reported sales price on the prior trading day or closing bid or
asked prices on the principal exchange closets to the last reported sales
price.
AccountLink. When shares are purchased through AccountLink, each
purchase must be at least $25.00. Shares will be purchased on the regular
business day the Distributor is instructed to initiate the Automated
Clearing House ("ACH") transfer to buy the shares. Dividends will begin
to accrue on shares purchased by the proceeds of ACH transfers on the
business day the Fund receives Federal Funds for the purchase through the
ACH system before the close of The New York Stock Exchange. The Exchange
normally closes at 4:00 P.M., but may close earlier on certain days. If
Federal Funds are received on a business day after the close of the
Exchange, the shares will be purchased and dividends will begin to accrue
on the next regular business day. The proceeds of ACH transfers are
normally received by the Fund 3 days after the transfers are initiated.
The Distributor and the Fund are not responsible for any delays in
purchasing shares resulting from delays in ACH transmissions.
Reduced Sales Charges. As discussed in the Prospectus, a reduced sales
charge rate may be obtained for Class A shares under Rights of
Accumulation and Letters of Intent because of the economies of sales
efforts and reduction in expenses realized by the Distributor, dealers and
brokers making such sales. No sales charge is imposed in certain other
circumstances described in the Prospectus because the Distributor incurs
little or no selling expenses. The term "immediate family" refers to
one's spouse, children, grandchildren, parents, grandparents, parents-in-
law, sons- and daughters-in-law, siblings, a sibling's spouse and a
spouse's siblings.
- The Oppenheimer Funds. The Oppenheimer funds are those mutual
funds for which the Distributor acts as the distributor or the sub-
distributor and include the following:
Oppenheimer Tax-Free Bond Fund
Oppenheimer New York Tax-Exempt Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Intermediate Tax-Exempt Fund
Oppenheimer Insured Tax-Exempt Fund
Oppenheimer Main Street California Tax-Exempt Fund
Oppenheimer Florida Tax-Exempt Fund
Oppenheimer Pennsylvania Tax-Exempt Fund
Oppenheimer New Jersey Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Discovery Fund
Oppenheimer Target Fund
Oppenheimer Growth Fund
Oppenheimer Equity Income Fund
Oppenheimer Value Stock Fund
Oppenheimer Asset Allocation Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Main Street Income & Growth Fund
Oppenheimer High Yield Fund
Oppenheimer Champion Income Fund
Oppenheimer Bond Fund
Oppenheimer U.S. Government Trust
Oppenheimer Limited-Term Government Fund
Oppenheimer Global Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Strategic Income Fund
Oppenheimer Strategic Income & Growth Fund
Oppenheimer International Bond Fund
Oppenheimer Enterprise Fund
Oppenheimer Quest Opportunity Value Fund
Oppenheimer Quest Growth & Income Value Fund
Oppenheimer Quest Small Cap Value Fund
Oppenheimer Quest Officers Value Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Rochester Fund Series
Rochester Portfolio Series
Rochester Fund Municipals
and the following "Money Market Funds":
Oppenheimer Money Market Fund, Inc.
Oppenheimer Cash Reserves
Centennial Money Market Trust
Centennial Tax Exempt Trust
Centennial Government Trust
Centennial New York Tax Exempt Trust
Centennial California Tax Exempt Trust
Centennial America Fund, L.P.
Daily Cash Accumulation Fund, Inc.
There is an initial sales charge on the purchase of Class A shares
of each of the Oppenheimer funds except Money Market Funds (under certain
circumstances described herein, redemption proceeds of Money Market Fund
shares may be subject to a contingent deferred sales charge).
- Letters of Intent. A Letter of Intent ("Letter") is the investor's
statement of intention to purchase Class A and Class B shares (or shares
of either class) of the Fund (and other eligible Oppenheimer funds) during
the 13-month period from the investor's first purchase pursuant to the
Letter (the "Letter of Intent period"), which may, at the investor's
request, include purchases made up to 90 days prior to the date of the
Letter. The Letter states the investor's intention to make the aggregate
amount of purchases (excluding any purchases made by reinvestment of
dividends or distributions or purchases made at net asset value without
sales charge), which together with the investor's holdings of such funds
(calculated at their respective public offering prices calculated on the
date of the Letter) will equal or exceed the amount specified in the
Letter. This enables the investor to count the shares to be purchased
under the Letter of Intent to obtain the reduced sales charge rate (as set
forth in the Prospectus) that applies under the Right of Accumulation to
current purchases of Class A shares. Each purchase of Class A shares
under the Letter will be made at the public offering price (including the
sales charge) that applies to a single lump-sum purchase of shares in the
amount intended to be purchased under the Letter.
In submitting a Letter, the investor makes no commitment to purchase
shares, but if the investor's purchases of shares within the Letter of
Intent period, when added to the value (at offering price) of the
investor's holdings of shares on the last day of that period, do not equal
or exceed the intended purchase amount, the investor agrees to pay the
additional amount of sales charge applicable to such purchases, as set
forth in "Terms of Escrow," below (as those terms may be amended from time
to time). The investor agrees that shares equal in value to 5% of the
intended purchase amount will be held in escrow by the Transfer Agent
subject to the Terms of Escrow. Also, the investor agrees to be bound by
the terms of the Prospectus, this Statement of Additional Information and
the Application used for such Letter of Intent, and if such terms are
amended, as they may be from time to time by the Fund, that those
amendments will apply automatically to existing Letters of Intent.
For purchases of shares of the Fund and other Oppenheimer funds by
Oppenheimer funds prototype 401(k) plans under a Letter of Intent, the
Transfer Agent will not hold shares in escrow. If the intended purchase
amount under the Letter entered into by an Oppenheimer funds prototype
401(k) plan is not purchased by the plan by the end of the Letter of
Intent period, there will be no adjustment of commissions paid to the
broker-dealer or financial institution of record for accounts held in the
name of that plan.
If the total eligible purchases made during the Letter of Intent
period do not equal or exceed the intended purchase amount, the
commissions previously paid to the dealer of record for the account and
the amount of sales charge retained by the Distributor will be adjusted
to the rates applicable to actual purchases. If total eligible purchases
during the Letter of Intent period exceed the intended purchase amount and
exceed the amount needed to qualify for the next sales charge rate
reduction set forth in the applicable prospectus, the sales charges paid
will be adjusted to the lower rate, but only if and when the dealer
returns to the Distributor the excess of the amount of commissions allowed
or paid to the dealer over the amount of commissions that apply to the
actual amount of purchases. The excess commissions returned to the
Distributor will be used to purchase additional shares for the investor's
account at the net asset value per share in effect on the date of such
purchase, promptly after the Distributor's receipt thereof.
In determining the total amount of purchases made under a Letter,
shares redeemed by the investor prior to the termination of the Letter of
Intent period will be deducted. It is the responsibility of the dealer
of record and/or the investor to advise the Distributor about the Letter
in placing any purchase orders for the investor during the Letter of
Intent period. All of such purchases must be made through the
Distributor.
- Terms of Escrow That Apply to Letters of Intent.
1. Out of the initial purchase (or subsequent purchases if
necessary) made pursuant to a Letter, shares of the Fund equal in value
to 5% of the intended purchase amount specified in the Letter shall be
held in escrow by the Transfer Agent. For example, if the intended
purchase amount is $50,000, the escrow shall be shares valued in the
amount of $2,500 (computed at the public offering price adjusted for a
$50,000 purchase). Any dividends and capital gains distributions on the
escrowed shares will be credited to the investor's account.
2. If the intended purchase amount specified under the Letter is
completed within the thirteen-month Letter of Intent period, the escrowed
shares will be promptly released to the investor.
3. If, at the end of the thirteen-month Letter of Intent period the
total purchases pursuant to the Letter are less than the intended purchase
amount specified in the Letter, the investor must remit to the Distributor
an amount equal to the difference between the dollar amount of sales
charges actually paid and the amount of sales charges which would have
been paid if the total amount purchased had been made at a single time.
Such sales charge adjustment will apply to any shares redeemed prior to
the completion of the Letter. If such difference in sales charges is not
paid within twenty days after a request from the Distributor or the
dealer, the Distributor will, within sixty days of the expiration of the
Letter, redeem the number of escrowed shares necessary to realize such
difference in sales charges. Full and fractional shares remaining after
such redemption will be released from escrow. If a request is received
to redeem escrowed shares prior to the payment of such additional sales
charge, the sales charge will be withheld from the redemption
proceeds.
4. By signing the Letter, the investor irrevocably constitutes and
appoints the Transfer Agent as attorney-in-fact to surrender for
redemption any or all escrowed shares.
5. The shares eligible for purchase under the Letter (or the
holding of which may be counted toward completion of a Letter) include (a)
Class A shares sold with a front-end sales charge or subject to a Class
A contingent deferred sales charge, (b) Class B shares acquired subject
to a contingent deferred sales charge, and (c) Class A shares or Class B
shares acquired in exchange for either (i) Class A shares of one of the
other Oppenheimer funds that were acquired subject to a Class A initial
or contingent deferred sales charge or (ii) Class B shares of one of the
other Oppenheimer funds that were acquired subject to a contingent
deferred sales charge.
6. Shares held in escrow hereunder will automatically be exchanged
for shares of another fund to which an exchange is requested, as described
in the section of the Prospectus entitled "Exchange Privilege," and the
escrow will be transferred to that other fund.
Asset Builder Plans. To establish an Asset Builder Plan from a bank
account, a check (minimum $25) for the initial purchase must accompany the
application. Shares purchased by Asset Builder Plan payments from bank
accounts are subject to the redemption restrictions for recent purchases
described in "How To Sell Shares," in the Prospectus. Asset Builder Plans
also enable shareholders of Oppenheimer Cash Reserves to use those
accounts for monthly automatic purchases of shares of up to four other
Oppenheimer funds.
There is a front-end sales charge on the purchase of certain
Oppenheimer funds, or a contingent deferred sales charge may apply to
shares purchased by Asset Builder payments. An application should be
obtained from the Distributor, completed and returned, and a prospectus
of the selected fund(s) should be obtained from the Distributor or your
financial advisor before initiating Asset Builder payments. The amount
of the Asset Builder investment may be changed or the automatic
investments may be terminated at any time by writing to the Transfer
Agent. A reasonable period (approximately 15 days) is required after the
Transfer Agent's receipt of such instructions to implement them. The Fund
reserves the right to amend, suspend, or discontinue offering such plans
at any time without prior notice.
Cancellation of Purchase Orders. Cancellation of purchase orders for
the Fund's shares (for example, when a purchase check is returned to the
Fund unpaid) causes a loss to be incurred when the net asset value of the
Fund's shares on the cancellation date is less than on the purchase date.
That loss is equal to the amount of the decline in the net asset value per
share multiplied by the number of shares in the purchase order. The
investor is responsible for that loss. If the investor fails to
compensate the Fund for the loss, the Distributor will do so. The Fund
may reimburse the Distributor for that amount by redeeming shares from any
account registered in that investor's name, or the Fund or the Distributor
may seek other redress.
How to Sell Shares
Information on how to sell shares of the Fund is stated in the
Prospectus. The information below supplements the terms and conditions for
redemptions set forth in the Prospectus.
- Involuntary Redemptions. The Board of Directors has the right to
cause the involuntary redemption of the shares held in any Fund account
if the aggregate net asset value of those shares is less than $200 or such
lesser amount as the Board may fix. The Board of Directors will not cause
the involuntary redemption of shares in an account if the aggregate net
asset value of the shares has fallen below the stated minimum solely as
a result of market fluctuations. Should the Board elect to exercise this
right, it may also fix, in accordance with the Investment Company Act, the
requirements for any notice to be given to the shareholders in question
(not less than 30 days), or the Board may set requirements for granting
permission to the Shareholder to increase the investment, and set other
terms and conditions so that the shares would not be involuntarily
redeemed.
Reinvestment Privilege. Within six months of a redemption, a
shareholder may reinvest all or part of the redemption proceeds of (i)
Class A shares, or (ii) Class B shares that were subject to the Class B
contingent deferred sales charge when redeemed. This privilege does not
apply to Class C shares. The reinvestment may be made without sales
charge only in Class A shares of the Fund or any of the other Oppenheimer
funds into which shares of the Fund are exchangeable as described below,
at the net asset value next computed after the Transfer Agent receives the
reinvestment order. The shareholder must ask the Distributor for that
privilege at the time of reinvestment. Any capital gain that was realized
when the shares were redeemed is taxable, and reinvestment will not alter
any capital gains tax payable on that gain. If there has been a capital
loss on the redemption, some or all of the loss may not be tax deductible,
depending on the timing and amount of the reinvestment. Under the
Internal Revenue Code, if the redemption proceeds of Fund shares on which
a sales charge was paid are reinvested in shares of the Fund or another
of the Oppenheimer funds within 90 days of payment of the sales charge,
the shareholder's basis in the shares of the Fund that were redeemed may
not include the amount of the sales charge paid. That would reduce the
loss or increase the gain recognized from the redemption. However, in
that case the sales charge would be added to the basis of the shares
acquired by the reinvestment of the redemption proceeds. The Fund may
amend, suspend or cease offering this reinvestment privilege at any time
as to shares redeemed after the date of such amendment, suspension or
cessation.
Transfers of Shares. Shares are not subject to the payment of a
contingent deferred sales charge of any class at the time of transfer to
the name of another person or entity (whether the transfer occurs by
absolute assignment, gift or bequest, not involving, directly or
indirectly, a public sale). The transferred shares will remain subject
to the contingent deferred sales charge, calculated as if the transferee
shareholder had acquired the transferred shares in the same manner and at
the same time as the transferring shareholder. If less than all shares
held in an account are transferred, and some but not all shares in the
account would be subject to a contingent deferred sales charge if redeemed
at the time of transfer, the priorities described in the Prospectus under
"How to Buy Shares" for the imposition of the Class B and Class C
contingent deferred sales charge will be followed in determining the order
in which shares are transferred.
Distributions From Retirement Plans. Requests for distributions from
OppenheimerFunds-sponsored IRAs, 403(b)(7) custodial plans, 401(k) plans,
or pension or profit-sharing plans should be addressed to "Trustee,
OppenheimerFunds Retirement Plans," c/o the Transfer Agent at its address
listed in "How To Sell Shares" in the Prospectus or on the back cover of
this Statement of Additional Information. The request must: (i) state the
reason for the distribution; (ii) state the owner's awareness of tax
penalties if the distribution is premature; and (iii) conform to the
requirements of the plan and the Fund's other redemption requirements.
Participants, other than self-employed persons maintaining a plan account
in their own name, in OppenheimerFunds-sponsored prototype pension or
profit-sharing or 401(k) plans may not directly redeem or exchange shares
held for their account under those plans. The employer or plan
administrator must sign the request. Distributions from pension, profit
sharing plans are subject to special requirements under the Internal
Revenue Code and certain documents (available from the Transfer Agent)
must be completed before the distribution may be made. Distributions from
retirement plans are subject to withholding requirements under the
Internal Revenue Code, and IRS Form W-4P (available from the Transfer
Agent) must be submitted to the Transfer Agent with the distribution
request, or the distribution may be delayed. Unless the shareholder has
provided the Transfer Agent with a certified tax identification number,
the Internal Revenue Code requires that tax be withheld from any
distribution even if the shareholder elects not to have tax withheld. The
Fund, the Manager, the Distributor, the Trustee and the Transfer Agent
assume no responsibility to determine whether a distribution satisfies the
conditions of applicable tax laws and will not be responsible for any tax
penalties assessed in connection with a distribution.
Special Arrangements for Repurchase of Shares from Dealers and Brokers.
The Distributor is the Fund's agent to repurchase its shares from
authorized dealers or brokers. The repurchase price per share will be the
net asset value next computed after the Distributor receives the order
placed by the dealer or broker, except that if the Distributor receives
a repurchase order from the dealer or broker after the close of The New
York Stock Exchange on a regular business day, it will be processed at
that day's net asset value, if the order was received by the dealer or
broker from its customer prior to the time the Exchange closes (normally,
that is 4:00 P.M., but may be earlier on some days) and the order was
transmitted to and received by the Distributor prior to its close of
business that day (normally 5:00 P.M.). Ordinarily, for accounts redeemed
by a broker-dealer under this procedure, payment will be made within three
business days after the shares have been redeemed upon the Distributor's
receipt of the required redemption documents in proper form, with the
signature(s) of the registered owners guaranteed on the redemption
document as described in the Prospectus.
Automatic Withdrawal and Exchange Plans. Investors owning shares of
the Fund valued at $5,000 or more can authorize the Transfer Agent to
redeem shares (minimum $50) automatically on a monthly, quarterly, semi-
annual or annual basis under an Automatic Withdrawal Plan. Shares will
be redeemed three business days prior to the date requested by the
shareholder for receipt of the payment. Automatic withdrawals of up to
$1,500 per month may be requested by telephone if payments are to be made
by check payable to all shareholders of record and sent to the address of
record for the account (and if the address has not been changed within the
prior 30 days). Required minimum distributions from Oppenheimer funds-
sponsored retirement plans may not be arranged on this basis. Payments
are normally made by check, but shareholders having AccountLink privileges
(see "How To Buy Shares") may arrange to have Automatic Withdrawal Plan
payments transferred to the bank account designated on the Oppenheimer
funds New Account Application or signature-guaranteed instructions. The
Fund cannot guarantee receipt of a payment on the date requested and
reserves the right to amend, suspend or discontinue offering such plans
at any time without prior notice. Because of the sales charge assessed
on Class A share purchases, shareholders should not make regular
additional Class A share purchases while participating in an Automatic
Withdrawal Plan. Class B and Class C shareholders should not establish
withdrawal plans because of the imposition of the contingent deferred
sales charges on such withdrawals (except where the Class B and Class C
contingent deferred sales charges are waived as described in the
Prospectus under "Waivers of Class B and Class C Contingent Deferred Sales
Charges").
By requesting an Automatic Withdrawal or Exchange Plan, the
shareholder agrees to the terms and conditions applicable to such plans,
as stated below and in the provisions of the Oppenheimer funds Application
relating to such Plans, as well as the Prospectus. These provisions may
be amended from time to time by the Fund and/or the Distributor. When
adopted, such amendments will automatically apply to existing Plans.
- Automatic Exchange Plans. Shareholders can authorize the Transfer
Agent (on the Oppenheimer funds Application or signature-guaranteed
instructions) to exchange a pre-determined amount of shares of the Fund
for shares (of the same class) of other Oppenheimer funds automatically
on a monthly, quarterly, semi-annual or annual basis under an Automatic
Exchange Plan. The minimum amount that may be exchanged to each other
fund account is $25. Exchanges made under these plans are subject to the
restrictions that apply to exchanges as set forth in "How to Exchange
Shares" in the Prospectus and below in this Statement of Additional
Information.
- Automatic Withdrawal Plans. Fund shares will be redeemed as
necessary to meet withdrawal payments. Shares acquired without a sales
charge will be redeemed first and shares acquired with reinvested
dividends and capital gains distributions will be redeemed next, followed
by shares acquired with a sales charge, to the extent necessary to make
withdrawal payments. Depending upon the amount withdrawn, the investor's
principal may be depleted. Payments made under withdrawal plans should
not be considered as a yield or income on your investment. It may not be
desirable to purchase additional Class A shares while making automatic
withdrawals because of the sales charges that apply to purchases when
made. Accordingly, a shareholder normally may not maintain an Automatic
Withdrawal Plan while simultaneously making regular purchases of Class A
shares.
The Transfer Agent will administer the investor's Automatic
Withdrawal Plan (the "Plan") as agent for the investor (the "Planholder")
who executed the Plan authorization and application submitted to the
Transfer Agent. The Transfer Agent shall incur no liability to the
Planholder for any action taken or omitted by the Transfer Agent in good
faith to administer the Plan. Certificates will not be issued for shares
of the Fund purchased for and held under the Plan, but the Transfer Agent
will credit all such shares to the account of the Planholder on the
records of the Fund. Any share certificates held by a Planholder may be
surrendered unendorsed to the Transfer Agent with the Plan application so
that the shares represented by the certificate may be held under the
Plan.
For accounts subject to Automatic Withdrawal Plans, distributions of
capital gains must be reinvested in shares of the Fund, which will be done
at net asset value without a sales charge. Dividends on shares held in
the account may be paid in cash or reinvested.
Redemptions of shares needed to make withdrawal payments will be made
at the net asset value per share determined on the redemption date.
Checks or ACH transfer payments of the proceeds of Plan withdrawals will
normally be transmitted three business days prior to the date selected for
receipt of the payment (receipt of payment on the date selected cannot be
guaranteed), according to the choice specified in writing by the
Planholder.
The amount and the interval of disbursement payments and the address
to which checks are to be mailed or AccountLink payments are to be sent
may be changed at any time by the Planholder by writing to the Transfer
Agent. The Planholder should allow at least two weeks' time in mailing
such notification for the requested change to be put in effect. The
Planholder may, at any time, instruct the Transfer Agent by written notice
(in proper form in accordance with the requirements of the then-current
Prospectus of the Fund) to redeem all, or any part of, the shares held
under the Plan. In that case, the Transfer Agent will redeem the number
of shares requested at the net asset value per share in effect in
accordance with the Fund's usual redemption procedures and will mail a
check for the proceeds to the Planholder.
The Plan may be terminated at any time by the Planholder by writing
to the Transfer Agent. A Plan may also be terminated at any time by the
Transfer Agent upon receiving directions to that effect from the Fund.
The Transfer Agent will also terminate a Plan upon receipt of evidence
satisfactory to it of the death or legal incapacity of the Planholder.
Upon termination of a Plan by the Transfer Agent or the Fund, shares that
have not been redeemed from the account will be held in uncertificated
form in the name of the Planholder, and the account will continue as a
dividend-reinvestment, uncertificated account unless and until proper
instructions are received from the Planholder or his or her executor or
guardian, or other authorized person.
To use shares held under the Plan as collateral for a debt, the
Planholder may request issuance of a portion of the shares in certificated
form. Upon written request from the Planholder, the Transfer Agent will
determine the number of shares for which a certificate may be issued
without causing the withdrawal checks to stop because of exhaustion of
uncertificated shares needed to continue payments. However, should such
uncertificated shares become exhausted, Plan withdrawals will terminate.
If the Transfer Agent ceases to act as transfer agent for the Fund,
the Planholder will be deemed to have appointed any successor transfer
agent to act as agent in administering the Plan.
How To Exchange Shares
As stated in the Prospectus, shares of a particular class of
Oppenheimer funds having more than one class of shares may be exchanged
only for shares of the same class of other Oppenheimer funds. At present
Rochester Fund Municipals, The Bond Fund For Growth and Limited Term New
York Municipal Fund have limited exchange rights; please see their
prospectuses for additional information. Shares of the Oppenheimer funds
that have a single class without a class designation are deemed "Class A"
shares for this purpose. All of the Oppenheimer funds offer Class A, B
and C shares except Oppenheimer Money Market Fund, Inc., Centennial Money
Market Trust, Centennial Tax Exempt Trust, Centennial Government Trust,
Centennial New York Tax Exempt Trust, Centennial California Tax Exempt
Trust, Centennial America Fund, L.P., and Daily Cash Accumulation Fund,
Inc., which only offer Class A shares and Oppenheimer Main Street
California Tax-Exempt Fund which only offers Class A and Class B shares
(Class B and Class C shares of Oppenheimer Cash Reserves are generally
available only by exchange from the same class of shares of other
Oppenheimer funds or through OppenheimerFunds sponsored 401(k) plans).
A list showing which funds offer which classes can be obtained by calling
the distributor at 1-800-525-7048.
Class A shares of Oppenheimer funds may be exchanged at net asset
value for shares of any Money Market Fund. Shares of any Money Market
Fund purchased without a sales charge may be exchanged for shares of
Oppenheimer funds offered with a sales charge upon payment of the sales
charge (or, if applicable, may be used to purchase shares of Oppenheimer
funds subject to a contingent deferred sales charge). However, shares of
Oppenheimer Money Market Fund, Inc. purchased with the redemption proceeds
of shares of other mutual funds (other than funds managed by the Manager
or its subsidiaries) redeemed within the 12 months prior to that purchase
may subsequently be exchanged for shares of other Oppenheimer funds
without being subject to an initial or contingent deferred sales charge,
whichever is applicable. To qualify for that privilege, the investor or
the investor's dealer must notify the Distributor of eligibility for this
privilege at the time the shares of Oppenheimer Money Market Fund, Inc.
are purchased, and, if requested, must supply proof of entitlement to this
privilege. Shares of this Fund acquired by reinvestment of dividends or
distributions from any other of the Oppenheimer funds or from any unit
investment trust for which reinvestment arrangements have been made with
the Distributor may be exchanged at net asset value for shares of any of
the Oppenheimer funds. No contingent deferred sales charge is imposed on
exchanges of shares of either class purchased subject to a contingent
deferred sales charge. However, when Class A shares acquired by exchange
of Class A shares of other Oppenheimer funds purchased subject to a Class
A contingent deferred sales charge are redeemed within 18 months of the
end of the calendar month of the initial purchase of the exchanged Class
A shares, the Class A contingent deferred sales charge is imposed on the
redeemed shares (see "Class A Contingent Deferred Sales Charge" in the
Prospectus). The Class B contingent deferred sales charge is imposed on
Class B shares acquired by exchange if they are redeemed within six years
of the initial purchase of the exchanged Class B shares. The Class C
contingent deferred sales charge is imposed on Class C shares acquired by
exchange if they are redeemed within 12 months of the initial purchase of
the exchanged Class C shares.
When Class B or Class C shares are redeemed to effect an exchange,
the priorities described in "How To Buy Shares" in the Prospectus for the
imposition of the Class B and Class C contingent deferred sales charges
will be followed in determining the order in which the shares are
exchanged. Shareholders should take into account the effect of any
exchange on the applicability and rate of any contingent deferred sales
charge that might be imposed in the subsequent redemption of remaining
shares. Shareholders owning shares of more than one class must specify
whether they intend to exchange Class A, Class B or Class C shares.
The Fund reserves the right to reject telephone or written exchange
requests submitted in bulk by anyone on behalf of 10 or more accounts. The
Fund may accept requests for exchanges of up to 50 accounts per day from
representatives of authorized dealers that qualify for this privilege. In
connection with any exchange request, the number of shares exchanged may
be less than the number requested if the exchange or the number requested
would include shares subject to a restriction cited in the Prospectus or
this Statement of Additional Information or would include shares covered
by a share certificate that is not tendered with the request. In those
cases, only the shares available for exchange without restriction will be
exchanged.
When exchanging shares by telephone, a shareholder must either have
an existing account in, or obtain and acknowledge receipt of a prospectus
of, the fund to which the exchange is to be made. For full or partial
exchanges of an account made by telephone, any special account features
such as Asset Builder Plans, Automatic Withdrawal Plans and retirement
plan contributions will be switched to the new account unless the Transfer
Agent is instructed otherwise. If all telephone lines are busy (which
might occur, for example, during periods of substantial market
fluctuations), shareholders might not be able to request exchanges by
telephone and would have to submit written exchange requests.
Shares to be exchanged are redeemed on the regular business day the
Transfer Agent receives an exchange request in proper form (the
"Redemption Date"). Normally, shares of the fund to be acquired are
purchased on the Redemption Date, but such purchases may be delayed by
either fund up to five business days if it determines that it would be
disadvantaged by an immediate transfer of the redemption proceeds. The
Fund reserves the right, in its discretion, to refuse any exchange request
that may disadvantage it (for example, if the receipt of multiple exchange
requests from a dealer might require the disposition of portfolio
securities at a time or at a price that might be disadvantageous to the
Fund).
The different Oppenheimer funds available for exchange have different
investment objectives, policies and risks, and a shareholder should assure
that the Fund selected is appropriate for his or her investment and should
be aware of the tax consequences of an exchange. For federal income tax
purposes, an exchange transaction is treated as a redemption of shares of
one fund and a purchase of shares of another. "Reinvestment Privilege,"
above, discusses some of the tax consequences of reinvestment of
redemption proceeds in such cases. The Fund, the Distributor, and the
Transfer Agent are unable to provide investment, tax or legal advice to
a shareholder in connection with an exchange request or any other
investment transaction.
Dividends, Capital Gains and Taxes
Tax Status of the Fund's Dividends and Distributions. The Federal tax
treatment of the Fund's dividends and capital gains distributions is
explained in the Prospectus under the caption "Dividends, Capital Gains
and Taxes." Special provisions of the Internal Revenue Code govern the
eligibility of the Fund's dividends for the dividends-received deduction
for corporate shareholders. Long-term capital gains distributions are not
eligible for the deduction. In addition, the amount of dividends paid by
the Fund which may qualify for the deduction is limited to the aggregate
amount of qualifying dividends that the Fund derives from its portfolio
investments that the Fund has held for a minimum period, usually 46 days.
A corporate shareholder will not be eligible for the deduction on
dividends paid on Fund shares held for 45 days or less. To the extent the
Fund's dividends are derived from gross income from option premiums,
interest income or short-term gains from the sale of securities or
dividends from foreign corporations, those dividends will not qualify for
the deduction.
Under the Internal Revenue Code, by December 31 each year, the Fund
must distribute 98% of its taxable investment income earned from January
1 through December 31 of that year and 98% of its capital gains realized
in the period from November 1 of the prior year through October 31 of the
current year, or else the Fund must pay an excise tax on the amounts not
distributed. While it is presently anticipated that the Fund will meet
those requirements, the Board of Directors and the Manager might determine
in a particular year that it would be in the best interest of shareholders
for the Fund not to make such distributions at the required levels and to
pay the excise tax on the undistributed amounts. That would reduce the
amount of income or capital gains available for distribution to
shareholders.
If the Fund qualifies as a "regulated investment company" under the
Internal Revenue Code, it will not be liable for Federal income taxes on
amounts paid by it as dividends and distribution. The Fund qualified
during its last fiscal year, and intends to qualify in current and future
years, but reserves the right not to do so. The Internal Revenue Code
contains a number of complex tests to determine whether the Fund will
qualify, and the Fund might not meet those tests in a particular year.
For example, if the Fund derives 30% or more of its gross income from the
sale of securities held less than three months, it may fail to qualify
(see "Tax Aspects of Covered Calls and Hedging Instruments," above). If
it did not so qualify, the Fund would be treated for tax purposes as an
ordinary corporation and receive no tax deduction for payments made to
shareholders.
The amount of a class's distributions may vary from time to time
depending on market conditions, the composition of the Fund's portfolio,
and expenses borne by the Fund or borne separately by a class, as
described in "Alternative Sales Arrangements -- Class A, Class B and Class
C Shares," above. Dividends are calculated in the same manner, at the
same time and on the same day for shares of each class. However,
dividends on Class B and Class C shares are expected to be lower as a
result of the asset-based sales charge on Class B and Class C shares, and
Class B and Class C dividends will also differ in amount as a consequence
of any difference in net asset value between the classes.
Dividends, distributions and the proceeds of the redemption of Fund
shares represented by checks returned to the Transfer Agent by the Postal
Service as undeliverable will be invested in shares of Oppenheimer Money
Market Fund, Inc., as promptly as possible after the return of such checks
to the Transfer Agent, to enable the investor to earn a return on
otherwise idle funds.
Dividend Reinvestment in Another Fund. Shareholders of the Fund may
elect to reinvest all dividends and/or capital gains distributions in
shares of the same class of any of the other Oppenheimer funds listed in
"Reduced Sales Charges," above, at net asset value without sales charge.
To elect this option, a shareholder must notify the Transfer Agent in
writing and either have an existing account in the fund selected for
reinvestment or must obtain a prospectus for that fund and an application
from the Distributor to establish an account. The investment will be made
at the net asset value per share in effect at the close of business on the
payable date of the dividend or distribution. Dividends and/or
distributions from certain of the Oppenheimer funds may be invested in
shares of this Fund on the same basis.
Additional Information About the Fund
The Custodian. State Street Bank and Trust Company acts as custodian
of the assets of the Fund. The Fund's cash balances in excess of $100,000
are not protected by Federal deposit insurance. Such uninsured balances
may be substantial.
Independent Accountants. Price Waterhouse LLP has been selected to
serve as the Fund's independent auditors with respect to the fiscal year
ending October 31, 1996. Their services include examining the annual
financial statements of the Fund as well as other related services. KPMG
Peat Marwick LLP previously served as the independent auditors of the
Fund.
Retirement Plans. The Distributor may print advertisements and
brochures concerning retirement plans, lump sum distributions and 401-k
plans. These materials may include descriptions of tax rules, strategies
for reducing risk and descriptions of the 401-k program offered by the
Distributor. From time to time hypothetical investment programs
illustrating various tax-deferred investment strategies will be used in
brochures, sales literature, and omitting prospectuses. The following
examples illustrate the general approaches that will be followed. These
hypotheticals will be modified with different investment amounts,
reflecting the amounts that can be invested in different types of
retirement programs, different assumed tax rates, and assumed rates of
return. They should not be viewed as indicative of past or future perfor-
mance of any OppenheimerFunds products.
<PAGE>
<TABLE>
<CAPTION>
Benefits of Long Term Tax-Free Benefits of Long Term Tax-Free
Compounding - Single Sum Compounding - Periodic Investment
Amount of Contribution: $100,000 Amount Invested Annually: $2,000
Rates of Return Rates of Return
Years8.00% 10.00% 12.00% Years8.00% 10.00% 12.00%
Value at End Value at End
<S> <C> <C> <C> <C> <C> <C> <C> <C>
5 $ 146,933$ 161,051$ 176,2345 $ 12,672 $ 13,431 $ 14,230
10 $ 215,892$ 259,374$ 310,58510 $ 31,291 $ 35,062 $ 39,309
15 $ 317,217$ 417,725$ 547,35715 $ 58,649 $ 69,899 $ 83,507
20 $ 466,096$ 672,750$ 964,62920 $ 98,846 $126,005 $161,397
25 $ 684,848$1,083,471$1,700,00625 $157,909 $216,364 $298,668
30 $1,006,266$1,744,940$2,995,99230 $244,692 $361,887 $540,585
</TABLE>
<TABLE>
<CAPTION>
Comparison of Taxable and Tax-Free Investing - Periodic Investments (Assumed Tax Rate: 28%)
Amount of Annual Contribution (Pre-Tax): $2,000 Annual Contribution (After Tax): $1,440
Tax Deferred Rates of Return Fully Taxed Rates of Return
Years8.00% 10.00% 12.00% Years5.76% 7.20% 8.64%
Value at End Value at End
<S> <C> <C> <C> <C> <C> <C> <C>
5 $ 12,672 $ 13,431 $ 14,230 5 $ 8,544 $ 8,913 $ 9,296
10 $ 31,291 $ 35,062 $ 39,309 10 $ 19,849 $ 21,531 $ 23,364
15 $ 58,649 $ 69,899 $ 83,507 15 $ 34,807 $ 39,394 $ 44,654
20 $ 98,846 $126,005 $161,397 20 $ 54,598 $ 64,683 $ 76,874
25 $157,909 $216,364 $298,668 25 $ 80,785 $100,485 $125,635
30 $244,692 $361,887 $540,585 30 $115,435 $151,171 $199,492
</TABLE>
<TABLE>
<CAPTION>
Comparison of Tax Deferred Investing -- Deducting Taxes at End
(Amount of Tax Rate as End: 28%)
Amount of Annual Contribution: $2,000
Tax Deferred Rates of Return
Years 8.00% 10.00% 12.00%
Value at End
<S> <C> <C> <C>
5 $ 11,924 $ 12,470 $ 13,046
10 $ 28,130 $ 30,485 $ 33,903
15 $ 50,627 $ 58,728 $ 68,525
20 $ 82,369 $101,924 $127,406
25 $127,694 $169,782 $229,041
30 $192,978 $277,359 $406,021
</TABLE>
<PAGE>
- -----------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Directors of
Quest for Value Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of Quest
for Value Fund, Inc., including the schedule of investments, as of October 31,
1995, and the related statement of operations for the year then ended, the
statements of changes in net assets for each of the years in the two year period
then ended and the financial highlights for each of the years in the five year
period then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
October 31, 1995 by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Quest
for Value Fund, Inc. as of October 31, 1995, the results of its operations for
the year then ended, the changes in its net assets for each of the years in the
two year period then ended, and the financial highlights for each of the years
in the five year period then ended in conformity with generally accepted
accounting principles.
KPMG Peat Marwick LLP
/s/ KPMG Peat Marwick LLP
New York, New York
December 20, 1995
41
<PAGE>
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Trustees of
Quest for Value Family of Funds:
In our opinion, the accompanying statements of assets and liabilities, including
the schedules of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Opportunity Fund, the Small
Capitalization Fund, the Growth and Income Fund, the U.S. Government Income
Fund, and the Investment Quality Income Fund (constituting part of Quest for
Value Family of Funds, hereafter referred to as the "Fund") at October 31, 1995,
the results of each of their operations for the year then ended, the changes in
each of their net assets for each of the two years in the period then ended and
the financial highlights for each of the periods indicated, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at October 31, 1995 by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
December 20, 1995
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
QUEST FOR VALUE FUND, INC.
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 19.9%
AUTOMOTIVE -- 6.0%
Ford Motor Credit Co.
$ 2,400,000 5.72%, 11/20/95 $ 2,392,755
6,600,000 5.73%, 11/27/95 6,572,687
General Motors Acceptance Corp.
335,000 5.74%, 11/20/95 333,985
10,700,000 5.77%, 11/20/95 10,667,415
------------
19,966,842
------------
BANKING -- 1.4%
4,700,000 Norwest Financial, Inc.
5.73%, 11/13/95 4,691,023
------------
COMPUTERS -- 0.1%
430,000 IBM Credit Corp.
5.70%, 11/06/95 429,660
------------
MACHINERY & ENGINEERING -- 2.1%
Deere (John) Capital Corp.
3,300,000 5.71%, 11/13/95 3,293,719
3,600,000 5.75%, 11/13/95 3,593,100
------------
6,886,819
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.1%
Beneficial Corp.
1,300,000 5.72%, 11/27/95 1,294,629
225,000 5.74%, 11/27/95 224,067
800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 798,472
Household Finance Corp.
14,200,000 5.72%, 12/04/95 14,125,545
1,000,000 5.73%, 11/27/95 995,862
Merrill Lynch & Co., Inc.
500,000 5.72%, 11/06/95 499,603
15,345,000 5.75%, 11/06/95 15,332,745
------------
33,270,923
------------
OIL/GAS -- 0.2%
500,000 Chevron Oil Finance Co.
5.71%, 11/08/95 499,445
------------
Total Short-Term Corporate Notes
(cost -- $65,744,712) $ 65,744,712
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
CONVERTIBLE CORPORATE BONDS -- 0.7%
REAL ESTATE
$ 2,330,921 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $2,198,259) $ 2,330,921
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 79.3%
AEROSPACE -- 6.0%
127,000 AlliedSignal, Inc. $ 5,397,500
177,000 McDonnell Douglas Corp. 14,469,750
------------
19,867,250
------------
APPAREL -- 1.4%
202,600 Warnaco Group, Inc. (Class A)* 4,710,450
------------
BANKING -- 3.4%
110,000 Citicorp 7,136,250
81,215 Mellon Bank Corp. 4,070,902
------------
11,207,152
------------
CHEMICALS -- 4.5%
60,000 du Pont (E.I.) de Nemours & Co. 3,742,500
81,000 Hercules, Inc. 4,323,375
64,000 Monsanto Co. 6,704,000
------------
14,769,875
------------
CONGLOMERATES -- 1.7%
90,200 General Electric Co. 5,705,150
------------
CONSUMER PRODUCTS -- 1.5%
149,000 Reebok International Ltd. 5,066,000
------------
CONTAINERS -- 2.2%
160,000 Temple - Inland, Inc. 7,280,000
------------
COSMETICS/TOILETRIES -- 1.5%
67,800 Avon Products, Inc. 4,822,275
------------
DRUGS & MEDICAL PRODUCTS -- 4.8%
179,000 Becton, Dickinson & Co. 11,635,000
48,000 Warner-Lambert Co. 4,086,000
------------
15,721,000
------------
</TABLE>
* Non-income producing security.
15
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 5.3%
177,000 Arrow Electronics, Inc.* $ 8,982,750
122,000 Intel Corp. 8,524,750
------------
17,507,500
------------
HEALTHCARE SERVICES -- 2.4%
440,000 Tenet Healthcare Corp. 7,865,000
------------
INSURANCE -- 17.2%
216,200 Ace Ltd. 7,350,800
35,300 AFLAC, Inc. 1,438,475
99,000 American International Group, Inc. 8,353,125
464,200 EXEL Ltd. 24,834,700
197,000 Progressive Corp., Ohio 8,175,500
101,000 Transamerica Corp. 6,842,750
------------
56,995,350
------------
METALS/MINING -- 2.7%
66,333 Freeport McMoRan, Inc. 2,479,208
8,518 Freeport McMoRan, Copper & Gold
(Class A) 194,849
279,290 Freeport McMoRan, Copper & Gold
(Class B) 6,353,848
------------
9,027,905
------------
MISCELLANEOUS FINANCIAL SERVICES -- 8.8%
200,000 American Express Co. 8,125,000
290,000 Countrywide Credit Industries, Inc. 6,416,250
214,000 Federal Home Loan Mortgage Corp. 14,819,500
------------
29,360,750
------------
PAPER PRODUCTS -- 1.9%
120,000 Champion International Corp. $ 6,420,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
REAL ESTATE -- 0.8%
3,050 Security Capital Realty, Inc. (A) 2,689,844
------------
RETAIL -- 6.3%
373,000 May Department Stores Co. 14,640,250
140,000 Mercantile Stores Co., Inc. 6,282,500
------------
20,922,750
------------
TELECOMMUNICATIONS -- 2.6%
344 Bell Atlantic Corp. 21,887
225,200 Sprint Corp. 8,670,200
------------
8,692,087
------------
TEXTILES -- 1.3%
340,000 Shaw Industries, Inc. 4,335,000
------------
TOYS/GAMES/HOBBY -- 0.9%
92,000 Hasbro, Inc. 2,806,000
------------
TRANSPORTATION -- 2.1%
84,000 CSX Corp. 7,035,000
------------
Total Common Stocks
(cost -- $190,764,443) $262,806,338
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $258,707,414)) 99.9% $330,881,971
Other Assets in Excess of
Other Liabilities 0.1 429,932
------ ------------
TOTAL NET ASSETS 100.0 % $331,311,903
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 9/15/94 $2,330,921 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 9/15/94 -- 3,050 926 882
</TABLE>
16
<PAGE>
- --------------------------------------------------------------------------------
OPPORTUNITY FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.6%
AUTOMOTIVE -- 2.4%
$15,000,000 General Motors Acceptance Corp.
5.77%, 11/20/95 $ 14,954,321
------------
BANKING -- 2.8%
Norwest Financial, Inc.
1,800,000 5.73%, 11/13/95 1,796,562
16,000,000 5.73%, 11/27/95 15,933,787
------------
17,730,349
------------
COMPUTERS -- 0.2%
1,490,000 IBM Credit Corp.
5.70%, 11/06/95 1,488,820
------------
MACHINERY & ENGINEERING -- 3.0%
Deere (John) Capital Corp.
13,600,000 5.71%, 11/13/95 13,574,115
5,235,000 5.74%, 11/13/95 5,224,984
------------
18,799,099
------------
MISCELLANEOUS FINANCIAL SERVICES -- 7.1%
Beneficial Corp.
1,200,000 5.72%, 11/20/95 1,196,377
10,455,000 5.73%, 11/20/95 10,423,382
1,800,000 CIT Group Holdings, Inc.
5.73%, 11/13/95 1,796,562
15,980,000 Household Finance Corp.
5.73%, 11/08/95 15,962,196
Merrill Lynch & Co., Inc.
4,500,000 5.75%, 11/02/95 4,499,281
11,475,000 5.75%, 11/06/95 11,465,836
------------
45,343,634
------------
OIL/GAS -- 0.1%
491,000 Chevron Oil Finance Co.
5.71%, 11/08/95 490,455
------------
Total Short-Term Corporate Notes
(cost -- $98,806,678) $ 98,806,678
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
U.S. TREASURY NOTES -- 0.5%
$ 1,000,000 7.50%, 11/15/01 $ 1,081,410
1,000,000 7.50%, 5/15/02 1,086,410
550,000 7.875%, 4/15/98 577,241
550,000 7.875%, 8/15/01 603,537
------------
Total U.S. Treasury Notes
(cost -- $3,143,397) $ 3,348,598
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 85.0%
AEROSPACE -- 9.0%
100,000 Loral Corp. $ 2,962,500
525,000 McDonnell Douglas Corp. 42,918,750
200,000 Northrop Grumman Corp. 11,450,000
------------
57,331,250
------------
AIRLINES -- 1.0%
100,000 AMR Corp.* 6,600,000
------------
BANKING -- 13.6%
525,000 Citicorp 34,059,375
34,100 First Empire State Corp. 6,709,175
450,000 Mellon Bank Corp. 22,556,250
110,000 Wells Fargo & Co. 23,113,750
------------
86,438,550
------------
CASINOS/GAMING -- 2.9%
750,000 Harrahs Entertainment, Inc. 18,562,500
------------
CHEMICALS -- 4.4%
260,000 du Pont (E.I.) de Nemours & Co. 16,217,500
220,000 Hercules, Inc. 11,742,500
------------
27,960,000
------------
CONSUMER PRODUCTS -- 3.2%
600,000 Reebok International Ltd. 20,400,000
------------
COSMETICS/TOILETRIES -- 0.7%
60,600 Avon Products, Inc. 4,310,175
------------
DRUGS & MEDICAL PRODUCTS -- 2.8%
275,000 Becton, Dickinson & Co. 17,875,000
------------
</TABLE>
* Non-income producing security.
17
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ELECTRONICS -- 8.1%
460,000 Intel Corp. $ 32,142,500
200,000 National Semiconductor Corp.* 4,875,000
50,000 Raychem Corp. 2,318,750
440,000 Unitrode Corp.* 11,825,000
------------
51,161,250
------------
INSURANCE -- 3.2%
300,000 EXEL Ltd. 16,050,000
60,000 Transamerica Corp. 4,065,000
------------
20,115,000
------------
METALS/MINING -- 5.2%
83,333 Freeport McMoRan, Inc. 3,114,583
1,302,100 Freeport McMoRan Copper & Gold
(Class B) 29,622,775
------------
32,737,358
------------
MISCELLANEOUS FINANCIAL SERVICES -- 10.5%
250,000 American Express Co. 10,156,250
500,000 Countrywide Credit Industries, Inc. 11,062,500
500,000 Federal Home Loan Mortgage Corp. 34,625,000
100,000 Federal National Mortgage Assoc. 10,487,500
------------
66,331,250
------------
OIL/GAS -- 6.0%
80,000 Mapco, Inc. 4,120,000
610,000 Tenneco, Inc. 26,763,750
149,300 Triton Energy Corp.* 6,961,113
------------
37,844,863
------------
PAPER PRODUCTS -- 7.2%
535,000 Champion International Corp. 28,622,500
325,000 Scott Paper Co. 17,306,250
------------
45,928,750
------------
TELECOMMUNICATIONS -- 1.8%
300,000 Sprint Corp. 11,550,000
------------
TEXTILES -- 2.4%
155,000 Collins & Aikman Corp.* $ 1,240,000
1,100,000 Shaw Industries, Inc. 14,025,000
------------
15,265,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
TOYS/GAMES/HOBBY -- 2.7%
600,000 Mattel, Inc. 17,250,000
------------
OTHER -- 0.3%
40,000 Alliant Techsystems, Inc.* 1,860,000
------------
Total Common Stocks
(cost -- $440,332,557) $539,520,946
------------
<CAPTION>
- ------------------------------------------------------
WARRANTS VALUE
- ------------------------------------------------------
<C> <S> <C>
WARRANTS -- 0.0%
HEALTHCARE SERVICES
34 Laboratory Corp. of America
Holdings
(cost -- $81) $ 21
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $542,282,713) 101.1% $641,676,243
Other Liabilities in Excess of
Other Assets (1.1) (7,165,129)
------ ------------
TOTAL NET ASSETS 100.0% $634,511,114
------ ------------
------ ------------
</TABLE>
SMALL CAPITALIZATION FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 15.1%
AUTOMOTIVE -- 1.8%
$ 2,758,000 General Motors Acceptance Corp.
5.81%, 11/06/95 $ 2,755,774
------------
BANKING -- 4.0%
6,000,000 Norwest Financial, Inc.
5.73%, 11/14/95 5,987,585
------------
INSURANCE -- 4.7%
7,000,000 Prudential Funding Corp.
5.73%, 11/27/95 6,971,031
------------
</TABLE>
* Non-income producing security.
18
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 1.8%
Deere (John) Capital Corp.
$ 1,560,000 5.71%, 11/13/95 $ 1,557,031
1,074,000 5.75%, 11/13/95 1,071,942
------------
2,628,973
------------
MISCELLANEOUS FINANCIAL SERVICES -- 2.8%
3,635,000 Beneficial Corp.
5.73%, 11/22/95 3,622,850
575,000 Household Finance Corp.
5.72%, 11/13/95 573,904
------------
4,196,754
------------
Total Short-Term Corporate Notes
(cost -- $22,540,117) $ 22,540,117
------------
CORPORATE NOTES & BONDS -- 0.4%
AUTOMOTIVE -- 0.0%
$ 62,950 Collins Industries, Inc.
8.75%, 1/11/00 $ 57,577
------------
OIL/GAS -- 0.4%
500,000 Global Marine, Inc.
12.75%, 12/15/99 552,500
------------
Total Corporate Notes & Bonds
(cost -- $585,111) $ 610,077
------------
CONVERTIBLE CORPORATE BONDS -- 0.9%
REAL ESTATE
$ 1,404,189 Security Capital Realty, Inc. (A)
12.00%, 6/30/14
(cost -- $1,325,889) $ 1,404,189
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS -- 0.2%
RETAIL
36,000 Family Bargain Corp.
$0.95 Conv. Pfd.
(cost -- $360,000) $ 220,500
------------
COMMON STOCKS -- 84.4%
ADVERTISING -- 6.2%
77,600 Katz Media Group, Inc.* $ 1,396,800
30,000 Omnicom Group, Inc. 1,916,250
292,400 True North Communications 5,921,100
------------
9,234,150
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
AEROSPACE -- 0.5%
97,500 BE Aerospace, Inc.* $ 767,813
------------
AUTOMOTIVE -- 1.7%
126,000 Collins Industries, Inc.* 259,875
120,100 Masland Corp. 1,681,400
70,000 Sudbury, Inc.* 586,250
------------
2,527,525
------------
BUILDING & CONSTRUCTION -- 5.8%
57,300 Carlisle Cos., Inc. 2,356,462
190,547 D.R. Horton, Inc. 2,119,835
26,500 Insituform Technologies (Class A)* 331,250
204,000 Martin Marietta Materials, Inc. 3,876,000
------------
8,683,547
------------
CHEMICALS -- 1.7%
86,400 OM Group, Inc. 2,505,600
------------
COMPUTER SERVICES -- 3.6%
149,900 BancTec, Inc.* 2,810,625
52,000 DST Systems, Inc. 1,092,000
114,000 Exabyte Corp.* 1,474,875
------------
5,377,500
------------
CONTAINERS -- 1.9%
169,000 Shorewood Packaging Corp.* 2,830,750
------------
DRUGS & MEDICAL PRODUCTS -- 1.9%
49,900 Amerisource Health Corp. (Class A) 1,359,775
33,900 Sybron International Corp. -
Wisconsin* 1,440,750
------------
2,800,525
------------
ELECTRONICS -- 8.9%
35,700 Arrow Electronics, Inc* 1,811,775
174,900 EG&G, Inc. 3,257,512
146,500 Marshall Industries* 5,164,125
111,000 Oak Industries, Inc.* 2,317,125
26,200 Unitrode Corp.* 704,125
------------
13,254,662
------------
</TABLE>
* Non-income producing security.
19
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
ENTERTAINMENT -- 0.2%
25,000 Hollywood Park, Inc.* $ 243,750
------------
FOOD SERVICES -- 1.0%
70,000 IHOP Corp.* 1,505,000
------------
HEALTHCARE SERVICES -- 2.8%
16,000 Charter Medical Corp.* 288,000
20,000 Community Health Systems, Inc.* 635,000
51,900 Dentsply International, Inc. 1,790,550
54,000 SpaceLabs Medical, Inc.* 1,390,500
------------
4,104,050
------------
HOUSEHOLD PRODUCTS -- 2.4%
120,000 Singer Co. 2,820,000
35,000 The Rival Co. 682,500
------------
3,502,500
------------
INSURANCE -- 5.3%
47,000 Ace Ltd. 1,598,000
62,800 Capsure Holdings Corp.* 855,650
119,400 E.W. Blanch Holdings, Inc. 2,298,450
112,500 Guaranty National Corp. 1,603,125
7,000 Horace Mann Educators Corp. 186,375
64,200 Prudential Reinsurance Holdings,
Inc. 1,308,075
------------
7,849,675
------------
LEASING -- 1.1%
101,700 Interpool, Inc.* 1,627,200
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
MACHINERY & ENGINEERING -- 6.0%
50,000 Baldwin Technologies Co., Inc
(Class A)* $ 268,750
40,000 Briggs & Stratton Corp. 1,615,000
52,100 BW/IP Holdings, Inc. (Class A) 872,675
145,000 Crane Co. 5,129,375
67,400 Harmon Industries, Inc. 994,150
------------
8,879,950
------------
MANUFACTURING -- 1.9%
94,000 North American Watch Corp. 1,703,750
50,000 Pall Corp. 1,218,750
------------
2,922,500
------------
METALS/MINING -- 0.4%
70,000 Olympic Steel, Inc.* 568,750
------------
OFFICE EQUIPMENT -- 0.8%
60,600 Nu-Kote Holdings, Inc. (Class A)* 1,257,450
------------
OIL/GAS -- 6.4%
92,800 Aquila Gas Pipeline Corp. 1,020,800
84,000 Belden & Blake Corp.* 1,219,313
200,000 Global Natural Resources, Inc.* 2,000,000
137,500 Noble Drilling Corp.* 962,500
165,000 Petroleum Heat & Power Co., Inc.
(Class A) 1,278,750
105,400 St. Mary Land & Exploration Co. 1,409,725
34,000 Triton Energy Corp.* 1,585,250
------------
9,476,338
------------
PAPER PRODUCTS -- 1.8%
422,000 Repap Enterprises, Inc.* 2,663,875
------------
PRINTING/PUBLISHING -- 1.4%
69,000 International Imaging Materials,
Inc. 1,742,250
20,000 Merrill Corp. 320,000
------------
2,062,250
------------
</TABLE>
* Non-income producing security.
20
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
REAL ESTATE -- 8.7%
151,800 Cousins Properties, Inc. $ 2,637,525
44,000 Post Properties, Inc. 1,320,000
231,600 Security Capital Industrial Trust,
Inc. 3,792,450
199,363 Security Capital Pacific Trust,
Inc. 3,563,614
1,800 Security Capital Realty, Inc. (A) 1,587,600
------------
12,901,189
------------
RETAIL -- 0.7%
10,900 Blair Corp. 321,550
60,000 The Maxim Group, Inc.* 780,000
------------
1,101,550
------------
TELECOMMUNICATIONS -- 1.2%
94,500 ECI Telecommunications Ltd. 1,795,500
------------
TEXTILES -- 4.8%
89,000 Collins & Aikman Corp.* 712,000
64,000 Culp, Inc. 624,000
42,700 Fab Industries, Inc. 1,248,975
149,600 Mohawk Industries, Inc.* 2,244,000
110,500 WestPoint Stevens, Inc.* 2,334,313
------------
7,163,288
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 2.6%
55,900 Morningstar Group, Inc.* 433,225
111,800 Ralcorp Holdings, Inc. 2,571,400
84,700 Sylvan, Inc.* 899,937
------------
3,904,562
------------
TRANSPORTATION -- 0.1%
8,000 MTL, Inc.* 117,000
------------
UTILITIES -- 1.5%
34,600 Sithe Energies, Inc.* 246,525
96,000 UGI Corp. 2,016,000
------------
2,262,525
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
OTHER -- 1.1%
93,300 McGrath RentCorp. $ 1,632,750
------------
Total Common Stocks
(cost -- $116,900,149) $125,523,724
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $141,711,266) 101.0% $150,298,607
Other Liabilities in Excess of
Other Assets (1.0) (1,483,609)
------ ------------
TOTAL NET ASSETS 100.0% $148,814,998
------ ------------
------ ------------
</TABLE>
GROWTH AND INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 1.9%
AUTOMOTIVE -- 0.4%
$ 200,000 Ford Motor Credit Co.
5.73%, 11/06/95 $ 199,841
------------
MISCELLANEOUS FINANCIAL SERVICES -- 1.5%
Beneficial Corp.
447,000 5.72%, 11/02/95 446,929
230,000 5.74%, 11/15/95 229,486
------------
676,415
------------
Total Short-Term Corporate Notes
(cost -- $876,256) $ 876,256
------------
CORPORATE NOTES & BONDS -- 18.2%
CASINOS/GAMING -- 1.9%
$ 1,000,000 Harrah's Jazz Co.
14.25%, 11/15/01 $ 875,000
------------
COSMETICS/TOILETRIES -- 3.8%
2,000,000 Playtex Family Products Corp.
9.00%, 12/15/03 1,790,000
------------
</TABLE>
* Non-income producing security.
(A) Restricted Securities (the Fund will not bear any costs, including those
involved in registration under the Securities Act of 1933, in connection
with the disposition of these securities):
<TABLE>
<CAPTION>
UNIT
VALUATION
AS
DATE OF UNIT OF OCTOBER
DESCRIPTION ACQUISITION PAR AMOUNT SHARES COST 31, 1995
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Security Capital
Realty, Inc.
12.00%, 6/30/14 6/16/94 $1,404,189 -- $ 94 $ 100
Security Capital
Realty, Inc.
Common Stock 8/02/93 -- 1,800 684 882
</TABLE>
21
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL VALUE
AMOUNT
- ------------------------------------------------------
<C> <S> <C>
ENTERTAINMENT -- 3.7%
$ 5,000,000 Time Warner, Inc.
Zero Coupon, 12/17/12 $ 1,725,000
------------
FOOD SERVICES -- 0.9%
1,000,000 Shoney's, Inc.
Zero Coupon, 4/11/04 402,500
------------
OIL/GAS -- 3.7%
2,000,000 Triton Energy Corp.
Zero Coupon, 11/01/97 1,700,000
------------
TELECOMMUNICATIONS -- 4.2%
1,000,000 Comcast Corp.
10.625%, 7/15/12 1,097,500
1,500,000 Nextel Communications, Inc.
0.00/11.50%, 9/01/03** 870,000
------------
1,967,500
------------
Total Corporate Notes & Bonds
(cost -- $8,705,038) $ 8,460,000
------------
CONVERTIBLE CORPORATE BONDS -- 6.5%
MANUFACTURING
$ 4,000,000 Mascotech, Inc.
4.50%, 12/15/03
(cost -- $3,042,591) $ 3,040,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
COMMON STOCKS -- 72.6%
AEROSPACE -- 4.4%
25,000 McDonnell Douglas Corp. $ 2,043,750
------------
AUTOMOTIVE -- 3.8%
40,000 General Motors Corp. 1,750,000
------------
BANKING -- 7.6%
32,000 Citicorp 2,076,000
50,000 U.S. Bancorp 1,481,250
------------
3,557,250
------------
CHEMICALS -- 2.7%
20,000 du Pont (E.I.) de Nemours & Co. 1,247,500
------------
COMPUTER SOFTWARE -- 1.1%
5,000 Microsoft Corp.* $ 500,000
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
SHARES VALUE
- ------------------------------------------------------
CONGLOMERATES -- 3.4%
100,000 Canadian Pacific Ltd. 1,600,000
------------
CONTAINERS -- 3.9%
40,000 Temple-Inland, Inc. 1,820,000
------------
ELECTRONICS -- 0.2%
1,000 Intel Corp. 69,875
------------
HEALTHCARE SERVICES -- 1.0%
10,000 Columbia/HCA Healthcare Corp. 491,250
------------
HOUSEHOLD PRODUCTS -- 4.0%
40,000 Premark International, Inc. 1,850,000
------------
INSURANCE -- 6.8%
15,000 Ace, Ltd. 510,000
10,000 AFLAC, Inc. 407,500
30,000 Progressive Corp., Ohio 1,245,000
20,000 Travelers, Inc. 1,010,000
------------
3,172,500
------------
MACHINERY & ENGINEERING -- 3.9%
45,000 Briggs & Stratton Corp. 1,816,875
------------
MEDIA/BROADCASTING -- 4.0%
20,000 Tele-Communications Liberty Media
Group (Series A)* 492,500
80,000 Tele-Communications TCI Group
(Series A)* 1,360,000
------------
1,852,500
------------
METALS/MINING -- 6.6%
133,687 Freeport McMoRan, Copper & Gold
(Class A) 3,058,090
------------
MISCELLANEOUS FINANCIAL SERVICES -- 0.5%
1,000 Countrywide Credit Industries, Inc. 22,125
3,000 Federal Home Loan Mortgage Corp. 207,750
------------
229,875
------------
OIL/GAS -- 1.6%
10,000 Triton Energy Corp.* $ 466,250
15,000 Union Texas Petroleum Holdings,
Inc. 270,000
------------
736,250
------------
</TABLE>
* Non-income producing security.
** Represents a step-up floater which will receive 0.00% interest until 9/01/98,
then will "step-up" to 11.50% until maturity.
22
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
SHARES VALUE
<C> <S> <C>
- ------------------------------------------------------
PAPER PRODUCTS -- 4.0%
35,000 Champion International Corp. 1,872,500
------------
TELECOMMUNICATIONS -- 4.5%
55,000 Sprint Corp. 2,117,500
------------
TEXTILES -- 8.6%
20,000 Shaw Industries, Inc. 255,000
50,000 Unifi, Inc. 1,125,000
55,000 VF Corp. 2,633,125
------------
4,013,125
------------
Total Common Stocks
(cost -- $30,820,524) $ 33,798,840
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $43,444,409) 99.2% $ 46,175,096
Other Assets in Excess of
Other Liabilities 0.8 358,263
------ ------------
TOTAL NET ASSETS 100.0 % $ 46,533,359
------ ------------
------ ------------
</TABLE>
U.S. GOVERNMENT INCOME FUND
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
REPURCHASE AGREEMENT -- 24.6%
$28,300,000 J.P. Morgan, 5.85%, 11/01/95
(proceeds at maturity:
$28,304,599, collateralized by
$27,265,000 par, $28,866,819
value, U.S. Treasury Notes,
7.50%, 10/31/99)
(cost -- $28,300,000) $ 28,300,000
------------
FEDERAL HOME LOAN MORTGAGE
CORPORATION -- 0.6%
$ 652,460 9.50%, 12/01/02 - 11/01/03
(cost -- $657,455) $ 679,981
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION I -- 43.6%
$19,729,923 7.00%, 2/15/22 - 11/15/23 $ 19,594,181
10,813,268 7.50%, 2/15/22 - 5/15/24 10,955,138
7,998,232 8.00%, 4/15/02 - 5/15/25 8,250,767
10,522,241 8.50%, 6/15/01 - 9/15/24 10,956,944
449,937 10.50%, 1/15/98 - 12/15/00 472,573
------------
Total Government National Mortgage
Association I (cost -- $50,865,933) $ 50,229,603
------------
U.S. TREASURY NOTES -- 30.4%
$15,000,000 5.875%, 8/15/98 $ 15,070,350
5,000,000 6.125%, 5/31/97 5,035,950
14,000,000 7.75%, 11/30/99 14,975,660
------------
Total U.S. Treasury Notes
(cost -- $34,397,838) $ 35,081,960
------------
</TABLE>
<TABLE>
<C> <S> <C> <C>
Total Investments
(cost -- $114,221,226) 99.2% $114,291,544
------ ------------
- ------------------------------------------------
PRINCIPAL
AMOUNT
SUBJECT
TO PUT VALUE
- ------------------------------------------------------
WRITTEN PUT OPTIONS OUTSTANDING -- (0.1%)
$25,000,000 U.S. Treasury Notes, 6.125%,
9/30/00, expiring Nov. '95, strike
@ $101.3125
(premium received: $132,812) $ (117,188)
------------
Other Assets in Excess of
Other Liabilities 0.9 1,067,411
------ ------------
TOTAL NET ASSETS 100.0 % $115,241,767
------ ------------
------ ------------
</TABLE>
* Non-income producing security.
23
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
INVESTMENT QUALITY INCOME FUND
<TABLE>
<CAPTION>
<C> <S> <C>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
SHORT-TERM CORPORATE NOTES -- 4.5%
MISCELLANEOUS FINANCIAL SERVICES
$ 1,800,000 Beneficial Corp.
5.75%, 11/06/95 $ 1,798,563
570,000 Household Finance Corp.
5.73%, 11/06/95 569,546
425,000 Merrill Lynch & Co., Inc.
5.75%, 11/02/95 424,932
------------
Total Short-Term Corporate Notes
(cost -- $2,793,041) $ 2,793,041
------------
CORPORATE NOTES & BONDS -- 93.6%
AEROSPACE -- 3.4%
$ 2,000,000 Boeing Co.
7.50%, 8/15/42 $ 2,092,300
------------
AIRLINES -- 2.9%
1,000,000 American Airlines
9.73%, 9/29/14 1,133,870
550,000 Delta Air Lines, Inc.
10.375%, 2/01/11 650,551
------------
1,784,421
------------
AUTOMOTIVE -- 3.6%
2,000,000 Ford Motor Credit Co. (A)
8.875%, 11/15/22 2,234,600
------------
BANKING -- 6.5%
70,000 NatWest Bancorp, Inc.
9.375%, 11/15/03 81,979
1,300,000 NCNB Corp.
10.20%, 7/15/15 1,680,731
500,000 RBSG Capital Corp.
10.125%, 3/01/04 606,020
1,500,000 Westpac Banking Corp.
9.125%, 8/15/01 1,680,810
------------
4,049,540
------------
CHEMICALS -- 1.0%
500,000 Rohm & Haas Co.
9.50%, 4/01/21 607,720
------------
CONGLOMERATES -- 4.0%
2,000,000 Canadian Pacific Ltd.
9.45%, 8/01/21 2,517,380
------------
ENTERTAINMENT -- 5.2%
3,000,000 Time Warner, Inc.
9.15%, 2/01/23 3,253,800
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
INSURANCE -- 11.6%
$ 1,000,000 Aetna Life & Casualty Co.
8.00%, 1/15/17 $ 1,015,020
1,200,000 Capital Holding Corp.
8.75%, 1/15/17 1,263,636
2,000,000 CNA Financial Corp.
7.25%, 11/15/23 1,900,200
3,000,000 Torchmark, Inc.
7.875%, 5/15/23 3,064,440
------------
7,243,296
------------
LEASING -- 2.7%
1,600,000 Ryder Systems, Inc.
8.75%, 3/15/17 1,712,464
------------
MACHINERY & ENGINEERING -- 3.3%
1,750,000 Caterpillar, Inc.
9.75%, 6/01/19 2,056,373
------------
MISCELLANEOUS FINANCIAL SERVICES -- 11.4%
20,000 Beneficial Corp.
12.875%, 8/01/13 24,110
1,500,000 BHP Finance USA Ltd.
8.50%, 12/01/12 1,700,430
Lehman Brothers, Inc.
865,000 9.875%, 10/15/00 955,280
115,000 10.00%, 5/15/99 127,045
205,000 Midland American Capital Corp.
12.75%, 11/15/03 240,533
3,000,000 Prudential Funding Corp.
6.75%, 9/15/23 (B) 2,672,760
1,250,000 Source One Mortgage Services Corp.
9.00%, 6/01/12 1,363,087
------------
7,083,245
------------
OIL/GAS -- 5.9%
3,000,000 Occidental Petroleum Corp.
11.125%, 6/01/19 3,677,430
------------
PAPER PRODUCTS -- 0.2%
100,000 Union Camp Corp.
10.00%, 5/01/19 113,709
------------
PIPELINES -- 3.1%
1,500,000 TransCanada Pipelines Ltd.
9.875%, 1/01/21 1,930,965
------------
RETAIL -- 1.3%
May Department Stores Co.
250,000 9.875%, 6/01/17 276,337
405,000 10.625%, 11/01/10 541,542
------------
817,879
------------
</TABLE>
24
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------------------------------------------------
TELECOMMUNICATIONS -- 11.8%
$ 2,500,000 New York Telephone Co.
9.375%, 7/15/31 $ 2,965,900
2,000,000 Pacific Bell
8.50%, 8/15/31 2,191,900
2,000,000 Southern New England Telephone Co.
8.70%, 8/15/31 2,168,720
------------
7,326,520
------------
TOBACCO/BEVERAGES/FOOD PRODUCTS -- 3.5%
2,000,000 American Brands, Inc.
7.875%, 1/15/23 2,153,300
------------
UTILITIES -- 7.0%
2,000,000 Hydro-Quebec
8.50%, 12/01/29 2,203,280
2,000,000 Southern California Edison Co.
8.875%, 6/01/24 2,140,540
------------
4,343,820
------------
<CAPTION>
- ------------------------------------------------------
<C> <S> <C>
PRINCIPAL
AMOUNT VALUE
- ------------------------------------------------------
OTHER -- 5.2%
$ 1,447,305 DLJ Mortgage Acceptance Corp.
8.75%, 11/25/24 $ 1,471,276
1,500,000 Nova Scotia (Province of)
8.875%, 7/01/19 1,733,370
------------
3,204,646
------------
Total Corporate Notes & Bonds
(cost -- $54,144,780) $ 58,203,408
------------
</TABLE>
<TABLE>
<S> <C> <C>
Total Investments
(cost -- $56,937,821) 98.1 % $ 60,996,449
Other Assets in Excess of
Other Liabilities 1.9 1,192,720
------ ------------
TOTAL NET ASSETS 100.0 % $ 62,189,169
------ ------------
------ ------------
</TABLE>
(A) Security segregated (partial) as collateral for open futures contracts. The
aggregate market value of such security is $558,650.
(B) Resale of the security is restricted to qualified institutional investors.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
25
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH U.S.
INVESTMENT
VALUE FUND, OPPORTUNITY CAPITALIZATION AND
GOVERNMENT QUALITY
INC. FUND FUND INCOME FUND INCOME FUND
INCOME FUND
------------ ------------ ------------ ----------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments, at value (cost --
$258,707,414, $542,282,713,
$141,711,266, $43,444,409,
$85,921,226 and $56,937,821,
respectively)...................... $330,881,971 $641,676,243 $150,298,607 $46,175,096 $ 85,991,544
$60,996,449
Repurchase agreement
(cost -- $28,300,000).............. -- -- -- -- 28,300,000 --
Cash................................ 45,640 547,052 554,656 43,048 147,175 59,556
Receivable for fund shares sold..... 530,951 3,886,531 429,526 135,588 112,467 66,286
Dividends receivable 243,046 997,122 50,222 40,770 -- --
Interest receivable................. 70,681 80,486 85,156 232,993 1,100,769 1,428,564
Receivable for investments sold..... -- 3,775,999 1,519,249 -- -- --
Receivable for mortgage
prepayments........................ -- -- -- -- 9,512 --
Deferred organization expenses...... -- -- -- 19,361 -- 1,598
Other assets........................ 39,549 22,478 12,365 17,891 30,144 12,304
------------ ------------ ------------ ----------- ------------ -----------
Total Assets...................... 331,811,838 650,985,911 152,949,781 46,664,747 115,691,611
62,564,757
------------ ------------ ------------ ----------- ------------ -----------
LIABILITIES
Written put options outstanding, at
value (premiums received:
$132,812).......................... -- -- -- -- 117,188 --
Payable for fund shares redeemed.... 246,415 541,931 381,171 39,485 94,741 182,432
Distribution fee payable............ 57,478 218,953 31,207 9,227 13,696 14,560
Investment advisory fee payable..... 54,437 103,767 24,467 6,603 11,374 6,111
Payable for investments purchased... -- 15,310,750 3,596,750 -- -- --
Dividends payable................... -- -- -- -- 100,543 79,161
Payable for futures variation
margin............................. -- -- -- -- -- 33,750
Other payables and accrued
expenses........................... 141,605 299,396 101,188 76,073 112,302 59,574
------------ ------------ ------------ ----------- ------------ -----------
Total Liabilities................. 499,935 16,474,797 4,134,783 131,388 449,844 375,588
------------ ------------ ------------ ----------- ------------ -----------
NET ASSETS
Par value........................... 22,865,787 259,205 86,170 42,633 102,228 57,180
Paid-in-surplus..................... 211,941,042 523,701,982 131,509,611 41,486,396 124,603,694
59,929,025
Accumulated undistributed net
investment income (loss)........... 2,115,981 3,043,582 817,130 62,229 (100,543) (1,302)
Accumulated undistributed net
realized gain (loss) on
investments........................ 22,214,536 8,112,815 7,814,746 2,211,414 (9,449,554) (1,441,862)
Net unrealized appreciation on
investments........................ 72,174,557 99,393,530 8,587,341 2,730,687 85,942 3,646,128
------------ ------------ ------------ ----------- ------------ -----------
Total Net Assets.................. $331,311,903 $634,511,114 $148,814,998 $46,533,359 $115,241,767
$62,189,169
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS A:
Fund shares outstanding............. 19,476,461 14,934,153 6,717,417 3,395,059 9,111,820
4,144,692
------------ ------------ ------------ ----------- ------------ -----------
Net asset value per share........... $ 14.51 $ 24.59 $ 17.31 $ 10.92 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
Maximum offering price per share*... $ 15.35 $ 26.02 $ 18.32 $ 11.46 $ 11.83 $ 11.42
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS B:
Fund shares outstanding............. 2,682,851 8,945,500 1,369,612 700,417 855,263 1,207,703
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.37 $ 24.33 $ 17.11 $ 10.88 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
CLASS C:
Fund shares outstanding............. 706,475 2,040,801 529,946 167,833 255,735 365,603
------------ ------------ ------------ ----------- ------------ -----------
Net asset value and offering price
per share.......................... $ 14.35 $ 24.31 $ 17.11 $ 10.89 $ 11.27 $ 10.88
------------ ------------ ------------ ----------- ------------ -----------
------------ ------------ ------------ ----------- ------------ -----------
</TABLE>
*Sales charges decrease on purchases of $50,000 or higher.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
26
<PAGE>
YEAR ENDED OCTOBER 31, 1995
- --------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
GROWTH
QUEST FOR SMALL AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT
QUALITY
FUND, INC. FUND FUND FUND INCOME FUND INCOME
FUND
----------- ----------- ------------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
INVESTMENT INCOME
Dividends*................... $4,933,153 $5,805,392 $ 1,902,266 $ 693,240 $ -- $ --
Interest..................... 2,545,437 4,798,092 1,684,966 1,089,203 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
Total investment income.... 7,478,590 10,603,484 3,587,232 1,782,443 8,894,940 4,872,959
----------- ----------- ------------- ---------- ----------- -----------
OPERATING EXPENSES
Investment advisory fees
(note 2a)................... 2,893,435 3,923,159 1,456,594 333,289 755,883 351,860
Distribution fees (note
2c)......................... 1,607,236 2,665,031 859,394 191,723 455,179 311,219
Transfer and dividend
disbursing agent fees (note
1i)......................... 330,355 410,006 206,267 73,852 130,367 71,201
Accounting service fees (note
2b)......................... -- 103,747 108,951 112,800 121,310 105,362
Registration fees............ 54,800 141,636 34,952 34,042 32,098 33,871
Custodian fees............... 40,216 47,751 22,819 18,724 70,657 21,556
Reports and notices to
shareholders................ 40,057 44,869 27,492 8,814 17,517 10,688
Auditing, consulting and tax
return preparation fees..... 24,597 18,515 18,514 14,435 40,367 17,355
Directors'(Trustees') fees
and expenses................ 17,270 17,270 17,270 8,870 17,270 17,270
Legal fees................... 11,749 10,120 7,222 4,721 6,836 5,236
Amortization of deferred
organization expenses (note
1c)......................... -- -- -- 19,148 -- 12,374
Miscellaneous................ 19,575 13,337 9,189 4,500 14,726 5,566
----------- ----------- ------------- ---------- ----------- -----------
Total operating expenses... 5,039,290 7,395,441 2,768,664 824,918 1,662,210 963,558
Less: Investment advisory
fees waived (note 2a)..... -- -- -- (8,286) -- (42,245)
----------- ----------- ------------- ---------- ----------- -----------
Net operating expenses... 5,039,290 7,395,441 2,768,664 816,632 1,662,210 921,313
----------- ----------- ------------- ---------- ----------- -----------
Net investment income.... 2,439,300 3,208,043 818,568 965,811 7,232,730 3,951,646
----------- ----------- ------------- ---------- ----------- -----------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS -- NET
Net realized gain (loss) on
security transactions....... 22,321,532 8,125,065 8,630,413 2,227,731 (3,475,568) (24,232)
Net realized loss on option
transactions (note 1f)...... -- -- -- -- (267,734) --
Net realized loss on futures
transactions (note 1g)...... -- -- (86,670) -- -- (464,750)
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss) on
investments............... 22,321,532 8,125,065 8,543,743 2,227,731 (3,743,302) (488,982)
Net change in unrealized
appreciation (depreciation)
on investments.............. 39,322,642 85,013,107 3,040,965 2,324,387 9,332,957 7,336,722
----------- ----------- ------------- ---------- ----------- -----------
Net realized gain (loss)
and change in unrealized
appreciation
(depreciation) on
investments............... 61,644,174 93,138,172 11,584,708 4,552,118 5,589,655 6,847,740
----------- ----------- ------------- ---------- ----------- -----------
Net increase in net assets
resulting from operations... $64,083,474 $96,346,215 $ 12,403,276 $5,517,929 $12,822,385
$10,799,386
----------- ----------- ------------- ---------- ----------- -----------
----------- ----------- ------------- ---------- ----------- -----------
<FN>
* Net of withholding taxes of $6,473, $732 and $1,752 for Quest for Value, Small
Capitalization and Growth and Income, respectively.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
27
<PAGE>
- --------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
QUEST FOR VALUE FUND,
INC. OPPORTUNITY FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31,
------------------------ ------------------------
1995 1994 1995 1994
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
OPERATIONS
Net investment income (loss).............................. $ 2,439,300 $ 1,726,225 $ 3,208,043 $ 1,397,364
Net realized gain (loss) on investments................... 22,321,532 16,664,331 8,125,065 7,139,720
Net change in unrealized appreciation (depreciation) on
investments.............................................. 39,322,642 (6,250,090) 85,013,107 4,721,481
----------- ----------- ----------- -----------
Net increase (decrease) in net assets resulting from
operations............................................. 64,083,474 12,140,466 96,346,215 13,258,565
----------- ----------- ----------- -----------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS*
Net investment income -- Class A.......................... (1,649,576) (819,873) (1,066,642) (2,269,483)
Net investment income -- Class B.......................... (108,497) (11,801) (335,822) (98,258)
Net investment income -- Class C.......................... (29,366) (2,040) (56,920) (21,098)
Net realized gains -- Class A............................. (15,501,438) (9,227,704) (5,314,298) (1,498,248)
Net realized gains -- Class B............................. (1,014,005) (115,604) (1,562,718) (30,484)
Net realized gains -- Class C............................. (255,884) (11,081) (267,734) (11,476)
Tax return of capital -- Class A.......................... -- -- -- --
Tax return of capital -- Class B.......................... -- -- -- --
Tax return of capital -- Class C.......................... -- -- -- --
----------- ----------- ----------- -----------
Total dividends and distributions to shareholders....... (18,558,766) (10,188,103) (8,604,134) (3,929,047)
----------- ----------- ----------- -----------
FUND SHARE TRANSACTIONS
CLASS A
Net proceeds from sales................................... 53,027,793 61,908,256 201,988,591 90,332,759
Reinvestment of dividends and distributions............... 16,047,556 9,385,655 6,034,648 3,405,284
Cost of shares redeemed................................... (64,462,161) (80,014,950) (60,771,127) (65,200,453)
----------- ----------- ----------- -----------
Net increase (decrease) -- Class A...................... 4,613,188 (8,721,039) 147,252,112 28,537,590
----------- ----------- ----------- -----------
CLASS B
Net proceeds from sales................................... 22,392,431 12,409,864 160,670,137 40,604,196
Reinvestment of dividends and distributions............... 1,045,812 123,599 1,804,130 124,021
Cost of shares redeemed................................... (3,681,109) (544,061) (14,031,965) (1,026,439)
----------- ----------- ----------- -----------
Net increase -- Class B................................. 19,757,134 11,989,402 148,442,302 39,701,778
----------- ----------- ----------- -----------
CLASS C
Net proceeds from sales................................... 6,835,837 3,521,667 40,882,367 6,945,412
Reinvestment of dividends and distributions............... 280,898 13,020 314,274 32,567
Cost of shares redeemed................................... (1,738,997) (271,901) (4,067,767) (254,081)
----------- ----------- ----------- -----------
Net increase -- Class C................................. 5,377,738 3,262,786 37,128,874 6,723,898
----------- ----------- ----------- -----------
Total net increase (decrease) in net assets from fund
share transactions....................................... 29,748,060 6,531,149 332,823,288 74,963,266
----------- ----------- ----------- -----------
Total increase (decrease) in net assets................. 75,272,768 8,483,512 420,565,369 84,292,784
NET ASSETS
Beginning of year......................................... 256,039,135 247,555,623 213,945,745 129,652,961
----------- ----------- ----------- -----------
End of year (including undistributed net investment income
(loss) of $2,115,981, $1,464,120; $3,043,582, $1,291,867;
$817,130, ($238,336); $62,229, $127,460; ($100,543), $0
and ($1,302), $0, respectively).......................... $331,311,903 $256,039,135 $634,511,114 $213,945,745
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
<FN>
*Certain figures have been restated to conform to current year presentation for
Opportunity, Growth and Income and U.S. Government.
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS.
</TABLE>
28
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SMALL CAPITALIZATION U.S. GOVERNMENT INCOME
FUND GROWTH AND INCOME FUND FUND INVESTMENT
QUALITY
INCOME FUND
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR
ENDED OCTOBER 31,
- -------------------------- ------------------------ -------------------------- ------------------------
1995 1994 1995 1994 1995 1994 1995 1994
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 818,568 $ (238,336) $ 965,811 $ 966,108 $ 7,232,730 $ 8,291,969 $ 3,951,646 $ 3,846,353
8,543,743 3,366,835 2,227,731 1,768,686 (3,743,302) (4,366,839) (488,982) (952,880)
3,040,965 (3,118,979) 2,324,387 (189,442) 9,332,957 (11,007,688) 7,336,722 (9,068,979)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
12,403,276 9,520 5,517,929 2,545,352 12,822,385 (7,082,558) 10,799,386 (6,175,506)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
-- -- (917,781) (936,128) (6,680,576) (8,071,564) (3,164,967) (3,482,793)
-- -- (105,700) (41,545) (464,033) (196,735) (586,935) (244,424)
-- -- (17,697) (7,305) (89,583) (39,362) (199,744) (119,136)
(3,010,761) (8,036,736) (1,275,011) (4,278,474) -- (3,218,859) -- (367,910)
(434,007) (160,831) (129,812) (152,311) -- (42,833) -- (10,112)
(91,772) (19,543) (20,124) (19,378) -- (7,144) -- (637)
-- -- -- -- (140,061) -- -- --
-- -- -- -- (8,675) -- -- --
-- -- -- -- (1,431) -- -- --
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(3,536,540) (8,217,110) (2,466,125) (5,435,141) (7,384,359) (11,576,497) (3,951,646) (4,225,012)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
38,194,245 127,081,752 8,471,883 5,937,491 18,642,107 17,007,814 8,023,597 12,621,718
2,840,961 7,215,556 2,097,137 5,008,623 5,896,557 9,588,703 2,288,961 2,758,350
(52,052,199) (111,134,238) (6,705,888) (6,040,040) (50,011,121) (74,313,512) (17,520,761) (20,364,228)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
(11,016,993) 23,163,070 3,863,132 4,906,074 (25,472,457) (47,716,995) (7,208,203) (4,984,160)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
10,160,304 15,275,222 4,674,731 2,763,975 5,110,647 6,748,251 7,327,816 6,440,954
408,265 148,570 217,205 188,513 319,245 187,137 462,628 185,172
(4,495,109) (811,203) (533,417) (260,750) (3,026,400) (964,994) (2,363,759) (800,932)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,073,460 14,612,589 4,358,519 2,691,738 2,403,492 5,970,394 5,426,685 5,825,194
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
6,393,572 3,345,761 1,497,250 341,819 2,026,463 1,424,484 1,204,849 3,141,700
88,907 18,810 36,149 26,593 85,658 46,127 93,152 93,436
(1,180,484) (229,505) (232,677) (4,696) (533,211) (289,465) (285,205) (422,838)
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
5,301,995 3,135,066 1,300,722 363,716 1,578,910 1,181,146 1,012,796 2,812,298
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
358,462 40,910,725 9,522,373 7,961,528 (21,490,055) (40,565,455) (768,722) 3,653,332
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
9,225,198 32,703,135 12,574,177 5,071,739 (16,052,029) (59,224,510) 6,079,018 (6,747,186)
139,589,800 106,886,665 33,959,182 28,887,443 131,293,796 190,518,306 56,110,151 62,857,337
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
$148,814,998 $139,589,800 $46,533,359 $33,959,182 $115,241,767 $131,293,796 $62,189,169 $56,110,151
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
- ------------ ------------ ----------- ----------- ------------ ------------ ----------- -----------
</TABLE>
29
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Quest for Value Funds are registered under the Investment Company Act of
1940, as diversified, open-end management investment companies. Quest for Value
Fund, Inc. ("Quest for Value") is a Maryland corporation. Opportunity Fund
("Opportunity"), Small Capitalization Fund ("Small Capitalization"), Growth and
Income Fund ("Growth and Income"), U.S. Government Income Fund ("U.S.
Government") and Investment Quality Income Fund ("Investment Quality") are five
of nine funds offered in the Quest for Value Family of Funds, a Massachusetts
business trust. Quest for Value Advisors (the "Adviser") serves as investment
adviser and provides accounting and administrative services to each fund. Quest
for Value Distributors (the "Distributor") serves as each fund's distributor.
Both the Adviser and Distributor are majority-owned (99%) subsidiaries of
Oppenheimer Capital.
Prior to September 1, 1993, the funds issued only one class of shares which
were redesignated Class A shares. Subsequent to that date all funds were
authorized to issue Class A, Class B and Class C shares. Shares of each Class
represent an identical interest in the investment portfolio of their respective
fund and generally have the same rights, but are offered under different sales
charges and distribution fee arrangements. Furthermore, Class B shares will
automatically convert to Class A shares of the same fund eight years after their
respective purchase.
The following is a summary of significant accounting policies consistently
followed by each fund in the preparation of its financial statements:
(A) VALUATION OF INVESTMENTS
Investment securities listed on a national securities exchange and
securities traded in the over-the-counter National Market System are valued at
the last reported sale price on the valuation date; if there are no such
reported sales, the securites are valued at the last quoted bid price. Other
securities traded over-the-counter and not part of the National Market System
are valued at the last quoted bid price. Investment debt securities (other than
short-term obligations) are valued each day by an independent pricing service
approved by the Board of Directors (Trustees) using methods which include
current market quotations from major market makers in the securities and
trader-reviewed "matrix" prices. Futures contracts are valued based upon their
daily settlement value as of the close of the exchange upon which they trade.
OTC options are valued based upon formulas which utilize the market value of the
underlying securities, strike prices and expiration dates of the options.
Short-term debt securities having a remaining maturity of sixty days or less are
valued at amortized cost or amortized value, which approximates market value.
Any securities or other assets for which market quotations are not readily
available are valued at their fair values as determined in good faith under
procedures established by each fund's Board of Directors (Trustees). The ability
of issuers of debt securities held by the funds to meet their obligations may be
affected by economic or political development in a specific state, industry or
region.
(B) FEDERAL INCOME TAXES
It is each fund's policy to comply with the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute
substantially all of its taxable income to its shareholders; accordingly, no
Federal income tax provision is required.
(C) DEFERRED ORGANIZATION EXPENSES
The following approximate costs were incurred in connection with their
organization: Growth and Income -- $96,000 and Investment Quality -- $62,000.
These costs have been deferred and are being amortized to expense on a
straight-line basis over sixty months from commencement of each fund's
operations.
(D) SECURITY TRANSACTIONS AND OTHER INCOME
Security transactions are accounted for on the trade date. In determining
the gain or loss from the sale of securities, the cost of securities sold is
determined on the basis of identified cost. Dividend income is recorded on the
ex-dividend
30
<PAGE>
- --------------------------------------------------------------------------------
date and interest income is accrued as earned. Discounts or premiums on debt
securities purchased are accreted or amortized to interest income over the lives
of the respective securities. Net investment income, other than class specific
expenses and unrealized gains and losses are allocated daily to each class of
shares based upon the relative proportion of net assets, as defined, of each
class.
(E) DIVIDENDS AND DISTRIBUTIONS
The following table summarizes each fund's dividend and capital gain
declaration policy:
<TABLE>
<CAPTION>
SHORT-TERM LONG-TERM
INCOME CAPITAL CAPITAL
DIVIDENDS GAINS GAINS
---------- ---------- ----------
<S> <C> <C> <C>
Quest for Value annually annually annually
Opportunity annually annually annually
Small Capitalization annually annually annually
Growth and Income quarterly annually annually
U.S. Government daily * quarterly annually
Investment Quality daily * annually annually
* paid monthly.
</TABLE>
Each fund records dividends and distributions to its shareholders on the
ex-dividend date. The amount of dividends and distributions from net investment
income and net realized capital gains are determined in accordance with federal
income tax regulations, which may differ from generally accepted accounting
principles. These "book-tax" differences are either considered temporary or
permanent in nature. To the extent these differences are permanent in nature,
such amounts are reclassified within the capital accounts based on their federal
tax-basis treatment; temporary differences do not require reclassification.
Dividends and distributions which exceed net investment income and net realized
capital gains for financial reporting purposes but not for tax purposes are
reported as dividends in excess of net investment income or distributions in
excess of net realized capital gains, respectively. To the extent distributions
exceed current and accumulated earnings and profits for federal income tax
purposes, they are reported as distributions of paid-in-surplus or tax return of
capital. Accordingly, permanent book-tax differences relating to shareholder
distributions have been reclassified to paid-in-surplus. Net investment
income(loss), net realized gain(loss) and net assets were not affected.
As required by Statement of Position 93 - 2, Determination, Disclosure and
Financial Statement Presentation of Income, Capital Gain and Return of Capital
Distributions by Investment Companies, the following table discloses the
reclassifications from accumulated undistributed net investment income(loss) and
accumulated undistributed capital gain(loss) on investments to paid-in-surplus
during the fiscal year ended October 31, 1995:
<TABLE>
<CAPTION>
ACCUMULATED
UNDISTRIBUTED
NET ACCUMULATED
INVESTMENT UNDISTRIBUTED PAID
INCOME NET REALIZED IN
(LOSS) GAIN (LOSS) SURPLUS
---------- --------------- --------
<S> <C> <C> <C>
Quest for Value -- -- --
Opportunity 3,056 (5,991) 2,935
Small Capitalization 236,898 (559,292) 322,394
Growth and Income 10,136 (152,783) 142,647
U.S. Government (99,081) (407,920) 507,001
Investment Quality (1,302) -- 1,302
</TABLE>
31
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
(F) WRITTEN OPTIONS ACCOUNTING POLICIES
When a fund writes a call option or a put option, an amount equal to the
premium received by the fund is included in the fund's Statement of Assets and
Liabilities as an asset and an equivalent liability. The amount of the liability
is subsequently marked-to-market to reflect the current market value of the
option written. If the option expires on its stipulated expiration date or if a
fund enters into a closing purchase transaction, the fund will realize a gain
(or loss if the cost of a closing purchase tranaction exceeds the premium
received when the option was written) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option will
be extinguished. If a call option which a fund has written is exercised, the
fund realizes a gain or loss from the sale of the underlying security and the
proceeds from such sale are increased by the premium originally received. If a
put option which a fund has written is exercised, the amount of the premium
originally received will reduce the cost of the security which the fund
purchases upon exercise of the option.
(G) FUTURES ACCOUNTING POLICIES
Futures contracts are agreements between two parties to buy and sell a
financial instrument at a set price on a future date. Upon entering into such a
contract, a fund is required to pledge to the broker an amount of cash, cash
equivalents or U.S. Government securities equal to the minimum "initial margin"
requirements of the exchange. Pursuant to the contract, a fund agrees to receive
from or pay to the broker an amount of cash equal to the daily fluctuation in
the value of the contract. Such receipts or payments are known as "variation
margin" and are recorded by the fund as unrealized appreciation or depreciation.
When a contract is closed, the fund records a realized gain or loss equal to the
difference between the value of the contract at the time it was opened and the
value at the time it was closed and reverses any unrealized appreciation or
depreciation previously recorded. At October 31, 1995, Investment Quality had
the following futures contracts open:
<TABLE>
<CAPTION>
NET
NUMBER OF UNREALIZED
TYPE CONTRACTS SHORT VALUE EXPIRATION LOSS
<S> <C> <C> <C> <C>
- ---------------------------------------------------------------------------
CBT U.S. Treasury Bond 120 $13,635,000 Dec. '95 $412,500
</TABLE>
(H) REPURCHASE AGREEMENTS
U.S. Government enters into repurchase agreements as part of its investment
program. The fund's custodian takes possession of collateral pledged by the
counterparty. The collateral is marked-to-market daily to ensure that the value,
plus accrued interest, is at least equal to the repurchase price. In the event
of default by the obligor to repurchase, the fund has the right to liquidate the
collateral and apply the proceeds in satisfaction of the obligation. Under
certain circumstances, in the event of default or bankruptcy by the other party
to the agreement, realization and/or retention of the collateral or proceeds may
be subject to legal proceedings.
(I) ALLOCATION OF EXPENSES
Expenses specifically identifiable to a particular fund or class are borne
by that fund or class. Other expenses are allocated to each fund or class based
on its net assets in relation to the total net assets of all applicable funds or
classes or on another reasonable basis. For the year ended October 31, 1995,
transfer and dividend disbursing agent fees accrued to classes A, B and C were
$279,089, $36,906 and $14,360, respectively, for Quest for Value; $236,086,
$141,736 and $32,184, respectively, for Opportunity; $146,564, $44,501 and
$15,202, respectively, for Small Capitalization; $61,191, $8,864 and $3,797,
respectively, for Growth and Income; $117,106, $8,732 and $4,529, respectively,
for U.S. Government and $58,422, $8,814 and $3,965, respectively, for Investment
Quality Income. These expenses are consolidated, by fund, in the accompanying
Statements of Operations.
32
<PAGE>
- --------------------------------------------------------------------------------
2. INVESTMENT ADVISORY FEE, ACCOUNTING SERVICES FEE, DISTRIBUTION FEE AND OTHER
TRANSACTIONS WITH AFFILIATES
(A) The investment advisory fee is payable monthly to the Adviser, and is
computed as a percentage of each fund's net assets as of the close of business
each day at the following annual rates: 1.00% for Quest for Value, Opportunity
and Small Capitalization, respectively; .85% for Growth and Income and .60% for
U.S. Government and Investment Quality, respectively. For the year ended October
31, 1995, the Adviser voluntarily waived $8,286 and $42,245 in investment
advisory fees for Growth and Income and Investment Quality, respectively.
(B) A portion of the accounting services fee for Opportunity, Small
Capitalization, Growth and Income, U.S. Government and Investment Quality is
payable monthly to the Adviser. These funds reimburse the Adviser for a portion
of the salaries of officers and employees of Oppenheimer Capital based upon the
amount of time such persons spend in providing services to each fund in
accordance with the provisions of the Investment Advisory Agreement. For the
year ended October 31, 1995, the Adviser received $48,747, $53,951, $57,800,
$56,310 and $50,362, respectively.
(C) The funds have adopted a Plan and Agreement of Distribution (the
"Plan") pursuant to which each fund is permitted to compensate the Distributor
in connection with the distribution of fund shares. Under the Plan, the
Distributor has entered into agreements with securities dealers and other
financial institutions and organizations to obtain various sales-related
services in rendering distribution assistance. To compensate the Distributor for
the services it and other dealers under the Plan provide and for the expenses
they bear under the Plan, the funds pay the Distributor compensation, accrued
daily and payable monthly on each fund's average daily net assets for Class A
shares at the following annual rates: .25% for Quest for Value, Opportunity and
Small Capitalization, .05% for U.S. Government and .15% for Investment Quality
and Growth and Income. Each fund's Class A shares also pay a service fee at the
annual rate of .25%. Compensation for Class B and Class C shares of each fund is
at an annual rate of .75% of average daily net assets. Each fund's Class B and
Class C shares also pay a service fee at the annual rate of .25%. Distribution
and service fees may be paid by the Distributor to broker dealers or others for
providing personal service, maintenance of accounts and ongoing sales or
shareholder support functions in connection with the distribution of fund
shares. While payments under the plan may not exceed the stated percentage of
average daily net assets on an annual basis, the payments are not limited to the
amounts actually incurred by the Distributor.
For the year ended October 31, 1995, distribution and service fees charged
to classes A, B and C were $1,286,200, $253,926 and $67,110, respectively, for
Quest for Value; $1,258,129, $1,165,226 and $241,676, respectively, for
Opportunity; $597,200, $201,055 and $61,139, respectively, for Small
Capitalization; $133,588, $48,455 and $9,680, respectively, for Growth and
Income; $344,839, $92,104 and $18,236, respectively, for U.S. Government and
$183,475, $95,449 and $32,295, respectively, for Investment Quality Income.
These expenses are consolidated, by fund, in the accompanying Statements of
Operations.
(D) Total brokerage commissions paid by Quest for Value, Opportunity, Small
Capitalization and Growth and Income were $309,310, $647,240, $400,477 and
$112,411, respectively, of which Oppenheimer & Co., Inc., an affiliate of the
Adviser, received $156,970, $266,868, $161,399 and $54,131, respectively, for
the year ended October 31, 1995.
(E) Oppenheimer & Co., Inc. has informed the funds that it received
approximately $390,000, $959,000, $241,000, $35,000, $162,000 and $88,000 in
connection with the sale of Class A shares for Quest for Value, Opportunity,
Small Capitalization, Growth and Income, U.S. Government and Investment Quality,
respectively, for the year ended October 31, 1995.
33
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
The Distributor has also informed the funds that it received contingent
deferred sales charges on the redemption of Class A and Class C shares of
approximately $10,000, $20,000, $10,000, $100, $6,000 and $2,000 for Quest for
Value, Opportunity, Small Capitalization, Growth and Income, U.S. Government and
Investment Quality, respectively, for the year ended October 31, 1995.
For the year ended October 31, 1995, the Distributor had assigned the right
to receive the compensation and contingent deferred sales charge on Class B
shares to a bank in return for the bank's reimbursement to the Distributor of
commissions paid by the Distributor to brokers/dealers on the sale of Class B
shares.
3. PURCHASES AND SALES OF SECURITIES
For the year ended October 31, 1995, purchases and sales of investment
securities, other than short-term securities, were as follows:
<TABLE>
<CAPTION>
QUEST FOR SMALL GROWTH AND U.S. INVESTMENT
VALUE OPPORTUNITY CAPITALIZATION INCOME GOVERNMENT QUALITY
------------ ------------- ---------------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ 89,609,378 $ 350,805,248 $ 92,530,292 $54,163,330 $259,064,073 $5,329,244
Sales 116,160,440 67,743,053 99,613,323 41,657,071 304,565,951 4,275,980
</TABLE>
The following table summarizes activity in written option transactions for U.S.
Government for the year ended October 31, 1995:
<TABLE>
<CAPTION>
CONTRACTS PREMIUMS
----------- -----------
<S> <C> <C>
Option contracts written: Outstanding
beginning of year 2 $ 142,188
Options written 47 3,306,327
Options terminated in closing purchase
transactions (25) (1,788,359)
Options exercised (15) (920,313)
Options expired (8) (607,031)
--- -----------
Option contracts written: Outstanding end of
year 1 $ 132,812
--- -----------
--- -----------
</TABLE>
34
<PAGE>
- --------------------------------------------------------------------------------
4. FUND SHARE TRANSACTIONS
The following tables summarize the fund share activity for the two years
ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR VALUE OPPORTUNITY SMALL
CAPITALIZATION
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR
ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
<C>
CLASS A
Issued................................ 4,045,256 5,077,999 9,028,138 4,781,210 2,307,655 7,804,081
Dividends and distributions
reinvested........................... 1,440,961 797,941 328,864 186,714 181,647 450,409
Redeemed.............................. (4,924,606) (6,566,112) (2,718,312) (3,470,990) (3,125,095)
(6,835,042)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 561,611 (690,172) 6,638,690 1,496,934 (635,793)
1,419,448
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 1,718,575 1,020,362 7,259,921 2,145,988 620,242 936,328
Dividends and distributions
reinvested........................... 94,418 10,514 98,923 6,821 26,272 9,286
Redeemed.............................. (277,524) (44,566) (624,721) (54,500) (271,244) (50,575)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 1,535,469 986,310 6,734,123 2,098,309 375,270 895,039
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 523,083 289,679 1,828,198 367,367 389,503 205,454
Dividends and distributions
reinvested........................... 25,381 1,106 17,240 1,789 5,721 1,176
Redeemed.............................. (127,913) (22,509) (176,839) (13,680) (71,284) (13,923)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 420,551 268,276 1,668,599 355,476 323,940 192,707
----------- ----------- ----------- ----------- ----------- -----------
Total net increase................ 2,517,631 564,414 15,041,412 3,950,719 63,417 2,507,194
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND INCOME U.S. GOVERNMENT
INVESTMENT QUALITY
------------------------- ------------------------- -------------------------
YEAR ENDED OCTOBER 31, YEAR ENDED OCTOBER 31, YEAR
ENDED OCTOBER 31,
------------------------- ------------------------- -------------------------
1995 1994 1995 1994 1995 1994
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
<C>
CLASS A
Issued................................ 790,817 591,037 1,685,034 1,484,549 777,291 1,194,443
Dividends and distributions
reinvested........................... 216,701 506,743 534,322 839,276 222,241 263,168
Redeemed.............................. (641,530) (600,435) (4,526,190) (6,552,668) (1,706,041)
(1,940,417)
----------- ----------- ----------- ----------- ----------- -----------
Net increase (decrease)............. 365,988 497,345 (2,306,834) (4,228,843) (706,509)
(482,806)
----------- ----------- ----------- ----------- ----------- -----------
CLASS B
Issued................................ 438,682 269,571 467,177 594,901 708,238 614,495
Dividends and distributions
reinvested........................... 22,368 19,104 28,912 16,698 44,636 18,150
Redeemed.............................. (51,318) (26,407) (272,297) (86,599) (228,114) (77,488)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 409,732 262,268 223,792 525,000 524,760 555,157
----------- ----------- ----------- ----------- ----------- -----------
CLASS C
Issued................................ 140,694 33,894 182,514 123,553 116,706 290,357
Dividends and distributions
reinvested........................... 3,711 2,697 7,733 4,123 8,984 9,047
Redeemed.............................. (21,778) (469) (47,976) (25,877) (27,176) (41,081)
----------- ----------- ----------- ----------- ----------- -----------
Net increase........................ 122,627 36,122 142,271 101,799 98,514 258,323
----------- ----------- ----------- ----------- ----------- -----------
Total net increase (decrease)..... 898,347 795,735 (1,940,771) (3,602,044) (83,235)
330,674
----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- -----------
</TABLE>
35
<PAGE>
OCTOBER 31, 1995
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
5. UNREALIZED APPRECIATION (DEPRECIATION) AND COST OF INVESTMENTS FOR FEDERAL
INCOME TAX PURPOSES
At October 31, 1995, the composition of unrealized appreciation
(depreciation) of investment securities and the cost of investments for Federal
income tax purposes were as follows:
<TABLE>
<CAPTION>
APPRECIATION (DEPRECIATION) NET TAX COST
------------ -------------- ----------- ------------
<S> <C> <C> <C> <C>
Quest for Value $72,832,935 $ (782,009) $72,050,926 $258,831,045
Opportunity 107,623,664 (8,230,134) 99,393,530 542,282,713
Small Capitalization 13,114,205 (4,646,081) 8,468,124 141,830,483
Growth and Income 3,674,355 (1,106,543) 2,567,812 43,607,284
U.S. Government 852,086 (2,085,345) (1,233,259) 115,524,803
Investment Quality 4,461,416 (402,788) 4,058,628 56,937,821
</TABLE>
6. AUTHORIZED FUND SHARES AND PAR VALUE PER SHARE
<TABLE>
<CAPTION>
QUEST SMALL GROWTH U.S. INVESTMENT
FOR VALUE OPPORTUNITY CAPITALIZATION AND INCOME GOVERNMENT
QUALITY
---------- ----------- -------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Authorized fund shares 35,000,000 unlimited unlimited unlimited unlimited unlimited
Par value per share $1.00 $.01 $.01 $.01 $.01 $.01
</TABLE>
7. DIVIDENDS AND DISTRIBUTIONS
The following tables summarize the per share dividends and distributions
made for the two years ended October 31, 1995:
<TABLE>
<CAPTION>
QUEST FOR SMALL
VALUE OPPORTUNITY CAPITALIZATION
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.083 $ 0.040 $ 0.117 $ 0.326 -- --
Class B.......................... 0.074 0.031 0.117 0.313 -- --
Class C.......................... 0.081 0.033 0.117 0.312 -- --
NET REALIZED GAINS:
Class A.......................... $ 0.828 $ 0.469 $ 0.614 $ 0.219 $ 0.415 $ 1.331
Class B.......................... 0.828 0.469 0.614 0.219 0.415 1.331
Class C.......................... 0.828 0.469 0.614 0.219 0.415 1.331
</TABLE>
<TABLE>
<CAPTION>
GROWTH AND U.S. INVESTMENT
INCOME GOVERNMENT QUALITY
-------------- -------------- --------------
YEAR ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, OCTOBER 31, OCTOBER 31,
-------------- -------------- --------------
1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
NET INVESTMENT INCOME:
Class A.......................... $ 0.289 $ 0.319 $ 0.639 $ 0.593 $ 0.707 $ 0.680
Class B.......................... 0.242 0.265 0.562 0.510 0.646 0.609
Class C.......................... 0.209 0.261 0.549 0.509 0.643 0.608
NET REALIZED GAINS:
Class A.......................... $ 0.422 $ 1.669 -- $ 0.213 -- $ 0.069
Class B.......................... 0.422 1.669 -- 0.213 -- 0.069
Class C.......................... 0.422 1.669 -- 0.213 -- 0.069
TAX RETURN OF CAPITAL:
Class A.......................... -- -- $ 0.013 -- -- --
Class B.......................... -- -- 0.013 -- -- --
Class C.......................... -- -- 0.013 -- -- --
</TABLE>
36
<PAGE>
- --------------------------------------------------------------------------------
8. FINANCIAL INSTRUMENTS AND ASSOCIATED RISKS
During the year ended October 31, 1995, U.S. Government wrote covered
options and Small Capitalization and Investment Quality entered into futures
contracts in order to hedge their existing portfolio securities against
fluctuations in value. Written options and futures contracts involve elements of
market risk in excess of the amounts reflected in the fund's Statements of
Assets and Liabilities. A fund, as a writer of an option, has no control over
whether the option is exercised. The underlying security may be sold and, as a
result, a fund bears the market risk of an unfavorable change in the price of
the security underlying the written option. For futures contracts, the contract
amount reflects the extent of a fund's exposure to off balance sheet risk.
Written options and futures contracts also have elements of credit risk; i.e.
the risk that the counterparty may not perform. If the option or futures
contracts are traded through a regulated exchange, the counterparty risk is
generally eliminated since the exchange interposes itself into the transaction.
If, however, the option or futures contracts are traded in the over-the-counter
market, counterparty risk can exist.
9. NET CAPITAL LOSS CARRYOVERS
For the fiscal year ended October 31, 1995, Growth and Income will utilize
$188,067 of net capital loss carryovers. Growth and Income has net capital loss
carryovers of $233,749 of which $177,811 and $55,938 will be available, to the
extent provided by regulations, to offset future net capital gains realized
through the fiscal years ending 1996 and 2000, respectively. However, due to the
acquisition of the Unified Income Fund and the Unified Mutual Shares Fund in
1992, the loss carryovers are further limited by IRC Section 382 to $188,067
annually. As a result, Growth and Income had $370,083 of net capital loss
carryover expire on October 31, 1995 which is no longer available for future
periods. In addition, U.S. Government, at October 31, 1995, had a net capital
loss carryover of $8,145,977 available, to the extent provided by regulations,
to offset future net capital gains realized before the end of fiscal year 2003.
Also at October 31, 1995, Investment Quality had a net capital loss carryover of
$1,854,362 of which $952,880 and $901,482 will be available to offset future net
capital gains realized through the fiscal years ending 2002 and 2003,
respectively. To the extent that the capital loss carryovers are used to offset
future net capital gains, it is probable that the gains so offset will not be
distributed to shareholders.
10. SUBSEQUENT EVENTS
(a) On November 22, 1995, OCC Distributors (previously Quest for Value
Distributors), OpCap Advisors (previously Quest for Value Advisors) and their
parent Oppenheimer Capital consummated a transaction with Oppenheimer Management
Corporation ("OMC") which resulted in the sale to OMC of certain mutual fund
assets of OCC Distributors and OpCap Advisors including the transfer of the
management agreements and other contracts relating to certain Quest for Value
Funds and the use of the name "Quest for Value". As part of the transaction,
certain former Quest for Value Funds, including the Quest for Value Fund and the
Opportunity Fund, the Small Capitalization Fund, the Growth and Income Fund and
the Officers Fund, portfolios of the Quest for Value Family of Funds, have
entered into an investment advisory agreement with OMC and OMC has entered into
a sub-advisory agreement with OpCap Advisors with respect to each of such funds.
Pursuant to the transaction, the U.S. Government Income Fund, the Investment
Quality Income Fund, the National Tax-Exempt Fund, the California Tax-Exempt
Fund and the New York Tax-Exempt Fund were merged, as part of a tax-free
reorganization, into the Oppenheimer U.S. Government Trust, the Oppenheimer Bond
Fund, the Oppenheimer Tax-Free Bond Fund, the Oppenheimer California Tax-Exempt
Fund and the Oppenheimer New York Tax-Exempt Fund, respectively.
(b) On November 22, 1995, U.S. Government and Investment Quality paid the
following per share net investment income dividends to shareholders of record on
the close of business November 22, 1995:
<TABLE>
<CAPTION>
CLASS CLASS CLASS
A B C
------ ------ ------
<S> <C> <C> <C>
U.S. Government $0.0352 $0.0302 $0.0298
Investment Quality 0.0384 0.0345 0.0343
</TABLE>
37
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND
DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments
Distributions
<S> <C> <C> <C> <C> <C> <C>
<C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 12.59 $ 0.12 $ 2.71 $ 2.83 ($ 0.08) ($ 0.83) ($ 0.91)
1994 12.51 0.09 0.50 0.59 (0.04) (0.47) (0.51)
1993 11.71 0.05 1.34 1.39 (0.05) (0.54) (0.59)
1992 10.61 0.04 1.77 1.81 (0.07) (0.64) (0.71)
1991 7.84 0.09 2.84 2.93 (0.16) -- (0.16)
Class B,
YEAR ENDED OCTOBER 31,
1995 12.53 0.05 2.69 2.74 (0.07) (0.83) (0.90)
1994 12.51 0.02 0.50 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.14) (0.15) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 12.52 0.04 2.70 2.74 (0.08) (0.83) (0.91)
1994 12.50 0.01 0.51 0.52 (0.03) (0.47) (0.50)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.66(3) (0.01) (0.15) (0.16) -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Quest for Value Fund, Inc.
Class A,
YEAR ENDED OCTOBER 31,
1995 $14.51 24.74% $282,615 1.68%(1) 0.90%(1) 36%
1994 12.59 5.01% 238,085 1.71% 0.72% 49%
1993 12.51 12.27% 245,320 1.75% 0.40% 27%
1992 11.71 18.45% 142,939 1.75% 0.53% 41%
1991 10.61 37.94% 79,914 1.83% 1.06% 48%
Class B,
YEAR ENDED OCTOBER 31,
1995 14.37 24.08% 38,557 2.21%(1) 0.36%(1) 36%
1994 12.53 4.43% 14,373 2.24% 0.14% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.51 (1.19%) 2,015 2.27%(5) (1.19%)(5) 27%
Class C,
YEAR ENDED OCTOBER 31,
1995 14.35 24.10% 10,140 2.26%(1) 0.31%(1) 36%
1994 12.52 4.45% 3,581 2.28% 0.09% 49%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.50 (1.26%) 221 2.27%(5) (0.90%)(5) 27%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $257,239,913, $25,392,617 AND $6,711,023, RESPECTIVELY.
Opportunity Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
<C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 19.69 $ 0.23 $ 5.40 $ 5.63 ($ 0.12) ($ 0.61) ($ 0.73)
1994 18.71 0.18 1.35 1.53 (0.33) (0.22) (0.55)
1993 16.73 0.35 2.02 2.37 (0.07) (0.32) (0.39)
1992 14.29 0.09 2.93 3.02 (0.03) (0.55) (0.58)
1991 9.74 0.03 4.78 4.81 (0.23) (0.03) (0.26)
Class B,
YEAR ENDED OCTOBER 31,
1995 19.59 0.11 5.36 5.47 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.34 1.42 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 19.58 0.08 5.38 5.46 (0.12) (0.61) (0.73)
1994 18.70 0.08 1.33 1.41 (0.31) (0.22) (0.53)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.73(3) 0.02 (0.05) (0.03) -- -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $24.59 29.88% $367,240 1.69%(1) 1.02%(1) 21%
1994 19.69 8.41% 163,340 1.78% 0.96% 42%
1993 18.71 14.34% 127,225 1.83% 2.69% 24%
1992 16.73 21.93% 40,563 2.27% 0.72% 32%
1991 14.29 50.44% 8,446 2.35%(2) 0.30%(2) 88%
Class B,
YEAR ENDED OCTOBER 31,
1995 24.33 29.19% 217,663 2.21%(1) 0.48%(1) 21%
1994 19.59 7.84% 43,317 2.34% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 2,115 2.52%(5) 1.32%(5) 24%
Class C,
YEAR ENDED OCTOBER 31,
1995 24.31 29.16% 49,608 2.31%(1) 0.37%(1) 21%
1994 19.58 8.06% 7,289 2.35% 0.43% 42%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 18.70 (0.16%) 313 2.52%(5) 1.13%(5) 24%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $251,625,672, $116,522,609 AND $24,167,608, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.33% AND (0.68%), RESPECTIVELY, FOR THE YEAR ENDED OCTOBER
31, 1991.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
38
<PAGE>
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND
DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Total
Value, Investment (Loss) from from Net Realized Dividends
Beginning Income on Investment Investment Gain on and
of Period (Loss)* Investments Operations Income Investments
Distributions
<S> <C> <C> <C> <C> <C> <C>
<C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 16.33 $ 0.11 $ 1.29 $ 1.40 $ -- ($ 0.42) ($ 0.42)
1994 17.68 (0.03) 0.01 (0.02) -- (1.33) (1.33)
1993 14.60 (0.04) 4.26 4.22 -- (1.14) (1.14)
1992 13.52 -- 1.50 1.50 -- (0.42) (0.42)
1991 8.80 (0.05) 4.85 4.80 (0.08) -- (0.08)
Class B,
YEAR ENDED OCTOBER 31,
1995 16.24 0.02 1.27 1.29 -- (0.42) (0.42)
1994 17.66 (0.11) 0.02 (0.09) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.49 0.47 -- -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 16.23 0.01 1.29 1.30 -- (0.42) (0.42)
1994 17.67 (0.13) 0.02 (0.11) -- (1.33) (1.33)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.19(3) (0.02) 0.50 0.48 -- -- --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Value, End of Average (Loss) Portfolio
End of Total Period Net to Average Turnover
Period Return** (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
Small Capitalization Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $17.31 8.82% $116,307 1.80%(1) 0.67%(1) 76%
1994 16.33 0.04% 120,102 1.88% (0.14%) 67%
1993 17.68 30.21% 104,898 1.89% (0.36%) 74%
1992 14.60 11.60% 39,693 2.11% (0.04%) 95%
1991 13.52 55.01% 20,686 2.25%(2) (0.41%)(2) 103%
Class B,
YEAR ENDED OCTOBER 31,
1995 17.11 8.17% 23,440 2.37%(1) 0.09%(1) 76%
1994 16.24 (0.39%) 16,144 2.48% (0.70%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.66 2.73% 1,754 2.57%(5) (1.15%)(5) 74%
Class C,
YEAR ENDED OCTOBER 31,
1995 17.11 8.24% 9,068 2.38%(1) 0.08%(1) 76%
1994 16.23 (0.51%) 3,344 2.59% (0.81%) 67%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 17.67 2.79% 235 2.57%(5) (1.20%)(5) 74%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $119,440,010, $20,105,476 AND $6,113,900, RESPECTIVELY.
(2) DURING THE PERIOD NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ITS FEE AND
ASSUMED A PORTION OF THE OPERATING EXPENSES. IF SUCH WAIVER AND ASSUMPTION
HAD NOT BEEN IN EFFECT, THE RATIO OF NET OPERATING EXPENSES TO AVERAGE NET
ASSETS AND THE RATIO OF NET INVESTMENT INCOME (LOSS) TO AVERAGE NET ASSETS
WOULD HAVE BEEN 3.27% AND (1.43%), RESPECTIVELY, FOR THE YEAR ENDED OCTOBER
31, 1991.
Growth and Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
<C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.09 $ 0.27 $ 1.27 $ 1.54 ($ 0.29) ($ 0.42) ($ 0.71)
1994 11.24 0.32 0.55 0.87 (0.32) (1.70) (2.02)
1993 10.80 0.30 0.73 1.03 (0.26) (0.33) (0.59)
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.00(3) 0.28 0.80 1.08 (0.28) -- (0.28)
Class B,
YEAR ENDED OCTOBER 31,
1995 10.07 0.19 1.28 1.47 (0.24) (0.42) (0.66)
1994 11.23 0.25 0.56 0.81 (0.27) (1.70) (1.97)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
Class C,
YEAR ENDED OCTOBER 31,
1995 10.07 0.15 1.30 1.45 (0.21) (0.42) (0.63)
1994 11.23 0.24 0.56 0.80 (0.26) (1.70) (1.96)
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.21(3) 0.04 0.05 0.09 (0.07) -- (0.07)
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
YEAR ENDED OCTOBER 31,
1995 $10.92 16.35% $37,082 1.99%(1,2) 2.60%(1,2) 130%
1994 10.09 8.64% 30,576 1.86%(2) 3.16%(2) 113%
1993 11.24 9.93% 28,466 1.90%(2) 2.66%(2) 192%
NOVEMBER 4, 1991 (6)
TO OCTOBER 31, 1992 10.80 10.84% 8,057 2.23%(2,5) 2.73%(2,5) 77%
Class B,
YEAR ENDED OCTOBER 31,
1995 10.88 15.65% 7,623 2.59%(1,2) 1.71%(1,2) 130%
1994 10.07 7.96% 2,928 2.47%(2) 2.53%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 319 2.49%(2,5) 1.83%(2,5) 192%
Class C,
YEAR ENDED OCTOBER 31,
1995 10.89 15.38% 1,828 2.88%(1,2) 1.39%(1,2) 130%
1994 10.07 7.91% 455 2.62%(2) 2.39%(2) 113%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.23 0.81% 102 2.49%(2,5) 2.18%(2,5) 192%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995 FOR CLASSES A, B, AND
C WERE $33,396,923, $4,845,598 AND $967,910, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION
OF ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 2.02% AND 2.57%,
RESPECTIVELY, FOR THE YEAR ENDED OCOTBER 31, 1995, 2.32% AND 2.70%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 2.18% AND 2.38%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993 AND 2.98% AND 1.98%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD NOVEMBER 4, 1991 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1992. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
ASSETS WOULD HAVE BEEN 2.57% AND 1.73%, RESPECTIVELY, FOR CLASS B AND 2.84%
AND 1.43%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1995,
2.93% AND 2.07%, RESPECTIVELY, FOR CLASS B AND 3.10% AND 1.91%,
RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.88% AND
1.44%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.87% AND 1.80%,
ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE PERIOD SEPTEMBER 2, 1993
(INITIAL OFFERING) TO OCTOBER 31, 1993.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) COMMENCEMENT OF OPERATIONS.
* BASED ON AVERAGE SHARES OUTSTANDING FOR THE PERIOD.
** ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
39
<PAGE>
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)
(CONTINUED)
<TABLE>
<CAPTION>
INCOME FROM
INVESTMENT OPERATIONS DIVIDENDS AND
DISTRIBUTIONS
---------------------------------- ----------------------------------
Net
Realized Distributions
and Dividends to
Unrealized to Shareholders
Net Asset Net Gain Total Shareholders from Net Tax
Value, Investment (Loss) from from Net Realized return
Beginning Income on Investment Investment Gain on of
of Period (Loss) Investments Operations Income Investments Capital
<S> <C> <C> <C> <C> <C> <C>
<C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 10.79 $ 0.64 $ 0.49 $ 1.13 ($ 0.64) $ -- ($ 0.01)
1994 12.08 0.59 (1.08) (0.49) (0.59) (0.21) --
1993 11.92 0.65 0.35 1.00 (0.68) (0.16) --
1992 11.80 0.74 0.18 0.92 (0.74) (0.06) --
1991 11.35 0.85 0.61 1.46 (0.86) (0.15) --
Class B,
YEAR ENDED OCTOBER 31,
1995 10.79 0.56 0.49 1.05 (0.56) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
Class C,
YEAR ENDED OCTOBER 31,
1995 10.79 0.55 0.49 1.04 (0.55) -- (0.01)
1994 12.08 0.51 (1.08) (0.57) (0.51) (0.21) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 12.13(3) 0.08 (0.04) 0.04 (0.08) (0.01) --
<CAPTION>
RATIOS
-----------------------------------
Ratio of
Net Ratio of
Operating Net
Net Net Expenses Investment
Asset Assets to Income
Total Value, End of Average (Loss) Portfolio
Dividends and End of Total Period Net to Average Turnover
Distributions Period Return* (000's) Assets Net Assets Rate
<S> <C> <C> <C> <C> <C> <C>
<C>
U.S. Government Income Fund
Class A,
YEAR ENDED OCTOBER 31,
1995 ($0.65) $11.27 10.78% $102,718 1.26%(1) 5.81%(1) 245%
1994 (0.80) 10.79 (4.15%) 123,257 1.20%(2) 5.19%(2) 126%
1993 (0.84) 12.08 8.55% 189,091 1.15%(2) 5.33%(2) 315%
1992 (0.80) 11.92 7.98% 151,197 1.15%(2) 6.26%(2) 207%
1991 (1.01) 11.80 13.40% 82,400 1.15%(2) 7.24%(2) 309%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.57) 11.27 10.01% 9,641 1.94%(1) 5.04%(1) 245%
1994 (0.72) 10.79 (4.84%) 6,813 1.92%(2) 4.53%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.29% 1,286 1.85%(2,5) 3.07%(2,5)
315%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.56) 11.27 9.89% 2,883 2.06%(1) 4.91%(1) 245%
1994 (0.72) 10.79 (4.84%) 1,224 1.94%(2) 4.57%(2) 126%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 12.08 0.34% 141 1.85%(2,5) 3.89%(2,5)
315%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $114,946,501, $9,210,406 AND $1,823,599, RESPECTIVELY.
(2) DURING THE PERIODS NOTED ABOVE, THE ADVISER VOLUNTARILY WAIVED A PORTION OF
ITS FEES. IF SUCH WAIVERS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.23% AND 5.16%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.20% AND 5.28%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.17% AND 6.24%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 1.46% AND 6.93%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1991. THE RATIOS OF NET
OPERATING EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT
INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 1.93% AND 4.52%, RESPECTIVELY,
FOR CLASS B AND 1.95% AND 4.56%, RESPECTIVELY, FOR CLASS C, FOR THE YEAR
ENDED OCTOBER 31, 1994 AND 1.96% AND 2.96%, ANNUALIZED, RESEPCTIVELY, FOR
CLASS B AND 1.96% AND 3.78%, ANNUALIZED, RESPECTIVELY, FOR CLASS C, FOR THE
PERIOD SEPTEMBER 2, 1993 (INITIAL OFFERING) TO OCTOBER 31, 1993.
Investment Quality Income Fund
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
<C>
Class A,
YEAR ENDED OCTOBER 31,
1995 $ 9.67 $ 0.71 $ 1.21 $ 1.92 ($ 0.71) $ -- $ --
1994 11.49 0.68 (1.75) (1.07) (0.68) (0.07) --
1993 10.36 0.68 1.19 1.87 (0.68) (0.06) --
1992 10.06 0.80 0.30 1.10 (0.80) -- --
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 10.00(3) 0.71 0.06 0.77 (0.71) -- --
Class B,
YEAR ENDED OCTOBER 31,
1995 9.67 0.65 1.21 1.86 (0.65) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.08 (0.03) 0.05 (0.08) -- --
Class C,
YEAR ENDED OCTOBER 31,
1995 9.67 0.64 1.21 1.85 (0.64) -- --
1994 11.49 0.61 (1.75) (1.14) (0.61) (0.07) --
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 11.52(3) 0.09 (0.03) 0.06 (0.09) -- --
<CAPTION>
Class A,
<S> <C> <C> <C> <C> <C> <C>
<C>
YEAR ENDED OCTOBER 31,
1995 ($0.71) $10.88 20.49% $ 45,078 1.44%(1,2) 6.90%(1,2) 8%
1994 (0.75) 9.67 (9.61%) 46,922 1.29%(2) 6.47%(2) 33%
1993 (0.74) 11.49 18.64% 61,288 1.20%(2) 6.07%(2) 12%
1992 (0.80) 10.36 11.21% 29,701 0.95%(2) 7.62%(2) 18%
DECEMBER 18, 1990 (6)
TO OCTOBER 31, 1991 (0.71) 10.06 8.11% 17,235 0.82%(2,5) 8.25%(2,5)
19%
Class B,
YEAR ENDED OCTOBER 31,
1995 (0.65) 10.88 19.78% 13,134 2.03%(1,2) 6.15%(1,2) 8%
1994 (0.68) 9.67 (10.22%) 6,605 1.92%(2) 5.85%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.08) 11.49 0.45% 1,468 1.84%(2,5) 3.68%(2,5)
12%
Class C,
YEAR ENDED OCTOBER 31,
1995 (0.64) 10.88 19.72% 3,977 2.08%(1,2) 6.18%(1,2) 8%
1994 (0.68) 9.67 (10.23%) 2,583 1.90%(2) 6.01%(2) 33%
SEPTEMBER 2, 1993 (4)
TO OCTOBER 31, 1993 (0.09) 11.49 0.55% 101 1.84%(2,5) 4.83%(2,5)
12%
</TABLE>
(1) AVERAGE NET ASSETS FOR THE YEAR ENDED OCTOBER 31, 1995, FOR CLASSES A, B,
AND C WERE $45,868,837, $9,544,915 AND $3,229,501, RESPECTIVELY.
(2) DURING THE PERIODS PRESENTED ABOVE, THE ADVISER VOLUNTARILY WAIVED ALL OR A
PORTION OF ITS FEES AND ASSUMED A PORTION OF ITS OPERATING EXPENSES. IF SUCH
WAIVERS AND ASSUMPTIONS HAD NOT BEEN IN EFFECT, THE RATIOS OF NET OPERATING
EXPENSES TO AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO
AVERAGE NET ASSETS FOR CLASS A WOULD HAVE BEEN 1.52% AND 6.82%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1995, 1.59% AND 6.71%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1994, 1.50% AND 5.77%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1993, 1.72% AND 6.85%,
RESPECTIVELY, FOR THE YEAR ENDED OCTOBER 31, 1992, AND 2.11% AND 6.96%,
ANNUALIZED, RESPECTIVELY, FOR THE PERIOD DECEMBER 18, 1990 (COMMENCEMENT OF
OPERATIONS) TO OCTOBER 31, 1991. THE RATIOS OF NET OPERATING EXPENSES TO
AVERAGE NET ASSETS AND THE RATIOS OF NET INVESTMENT INCOME TO AVERAGE NET
AASETS WOULD HAVE BEEN 2.09% AND 6.09%, RESPECTIVELY, FOR CLASS B AND 2.15%
AND 6.11%, RESPECTIVELY FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1995,
2.23% AND 5.54%, RESPECTIVELY, FOR CLASS B AND 2.21% AND 5.70%,
RESPECTIVELY, FOR CLASS C, FOR THE YEAR ENDED OCTOBER 31, 1994 AND 2.07% AND
3.45%, ANNUALIZED, RESPECTIVELY, FOR CLASS B AND 2.06% AND 4.61%,
ANNUALIZED, RESPECTIVELY, FOR CLASS C FOR THE PERIOD SEPTEMBER 2, 1993
(INITIAL OFFERING) TO OCTOBER 31, 1993.
- ----------------------------------
(3) OFFERING PRICE.
(4) INITIAL OFFERING OF CLASS B AND CLASS C SHARES.
(5) ANNUALIZED.
(6) COMMENCEMENT OF OPERATIONS.
* ASSUMES REINVESTMENT OF ALL DIVIDENDS AND DISTRIBUTIONS, BUT DOES NOT
REFLECT DEDUCTIONS FOR SALES CHARGES. AGGREGATE (NOT ANNUALIZED) TOTAL
RETURN IS SHOWN FOR ANY PERIOD SHORTER THAN ONE YEAR.
Appendix A
DESCRIPTION OF RATINGS
Bond Ratings
- - Moody's Investors Service, Inc.
Aaa: Bonds which are rated "Aaa" are judged to be the best quality and
to carry the smallest degree of investment risk. Interest payments are
protected by a large or by an exceptionally stable margin and principal
is secure. While the various protective elements are likely to change,
the changes that can be expected are most unlikely to impair the
fundamentally strong position of such issues.
Aa: Bonds which are rated "Aa" are judged to be of high quality by all
standards. Together with the "Aaa" group, they comprise what are generally
known as "high-grade" bonds. They are rated lower than the best bonds
because margins of protection may not be as large as with "Aaa" securities
or fluctuation of protective elements may be of greater amplitude or there
may be other elements present which make the long-term risks appear
somewhat larger than those of "Aaa" securities.
A: Bonds which are rated "A" possess many favorable investment
attributes and are to be considered as upper-medium grade obligations.
Factors giving security to principal and interest are considered adequate
but elements may be present which suggest a susceptibility to impairment
sometime in the future.
Baa: Bonds which are rated "Baa" are considered medium grade
obligations, i.e., they are neither highly protected nor poorly secured.
Interest payments and principal security appear adequate for the present
but certain protective elements may be lacking or may be
characteristically unreliable over any great length of time. Such bonds
lack outstanding investment characteristics and have speculative
characteristics as well.
Ba: Bonds which are rated "Ba" are judged to have speculative elements;
their future cannot be considered well-assured. Often the protection of
interest and principal payments may be very moderate and not well
safeguarded during both good and bad times over the future. Uncertainty
of position characterizes bonds in this class.
B: Bonds which are rated "B" generally lack characteristics of
desirable investment. Assurance of interest and principal payments or of
maintenance of other terms of the contract over any long period of time
may be small.
Caa: Bonds which are rated "Caa" are of poor standing and may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca: Bonds which are rated "Ca" represent obligations which are
speculative in a high degree and are often in default or have other marked
shortcomings.
C: Bonds which are rated "C" can be regarded as having extremely poor
prospects of ever retaining any real investment standing.
- Standard & Poor's Corporation
AAA: "AAA" is the highest rating assigned to a debt obligation and
indicates an extremely strong capacity to pay principal and interest.
AA: Bonds rated "AA" also qualify as high quality debt obligations.
Capacity to pay principal and interest is very strong, and in the majority
of instances they differ from "AAA" issues only in small degree.
A: Bonds rated "A" have a strong capacity to pay principal and
interest, although they are somewhat more susceptible to adverse effects
of change in circumstances and economic conditions.
BBB: Bonds rated "BBB" are regarded as having an adequate capacity to
pay principal and interest. Whereas they normally exhibit protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay principal and interest for
bonds in this category than for bonds in the "A" category.
BB, B, CCC, CC: Bonds rated "BB," "B," "CCC" and "CC" are regarded, on
balance, as predominantly speculative with respect to the issuer's
capacity to pay interest and repay principal in accordance with the terms
of the obligation. "BB" indicates the lowest degree of speculation and
"CC" the highest degree. While such bonds will likely have some quality
and protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse conditions.
C, D: Bonds on which no interest is being paid are rated "C." Bonds
rated "D" are in default and payment of interest and/or repayment of
principal is in arrears.
- Fitch Investors Service, Inc.
AAA Bonds considered to be investment grade and of the highest credit
quality. The obligor has an exceptionally strong ability to pay interest
and repay principal, which is unlikely to be affected by reasonably
foreseeable events.
AA Bonds considered to be investment grade and of very high credit
quality. The obligor's ability to pay interest and repay principal is
very strong, although not quite as strong as bonds rated "AAA." Because
bonds rated in the "AAA" and "AA" categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these
issuers is generally rated "F-1+."
A Bonds considered to be investment grade and of high credit quality.
The obligor's ability to pay interest and repay principal is considered
to be strong, but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher ratings.
BBB Bonds considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is
considered to be adequate. Adverse changes in economic conditions and
circumstances, however, are more likely to have adverse impact on these
bonds, and therefore impair timely payment. The likelihood that the
ratings of these bonds will fall below investment grade is higher than for
bonds with higher ratings.
BB Bonds are considered speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified
which could assist the obligor in satisfying its debt service
requirements.
B Bonds are considered highly speculative. While bonds in this class
are currently meeting debt service requirements, the probability of
continued timely payment of principal and interest reflects the obligor's
limited margin of safety and the need for reasonable business and economic
activity through the life of the issue.
CCC Bonds have certain identifiable characteristics which, if not
remedied, may lead to default. The ability to meet obligations requires
an advantageous business and economic environment.
CC Bonds are minimally protected. Default in payment of interest
and/or principal seems probable over time.
C Bonds are in imminent default in payment of interest or
principal.
DDD, DD, and D Bonds are in default on interest and/or principal
payments. Such bonds are extremely speculative and should be valued on
the basis of their ultimate recovery value in liquidation or
reorganization of the obligor. "DDD" represents the highest potential for
recovery of these bonds, and "D" represents the lowest potential for
recovery.
Plus (+) Minus (-) Plus and minus signs are used with a rating symbol
to indicate the relative position of a credit within the rating category.
Plus and minus signs, however, are not used in the "DDD," "DD," or "D"
categories.
Short-Term Debt Ratings.
- Moody's Investors Service, Inc. The following rating designations
for commercial paper (defined by Moody's as promissory obligations not
having original maturity in excess of nine months), are judged by Moody's
to be investment grade, and indicate the relative repayment capacity of
rated issuers:
Prime-1: Superior capacity for repayment. Capacity will normally be
evidenced by the following characteristics: (a) leveling market positions
in well-established industries; (b) high rates of return on funds
employed; (c) conservative capitalization structures with moderate
reliance on debt and ample asset protection; (d) broad margins in earning
coverage of fixed financial charges and high internal cash generation; and
(e) well established access to a range of financial markets and assured
sources of alternate liquidity.
Prime-2: Strong capacity for repayment. This will normally be
evidenced by many of the characteristics cited above but to a lesser
degree. Earnings trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics, while still
appropriate, may be more affected by external conditions. Ample alternate
liquidity is maintained.
Moody's ratings for state and municipal short-term obligations are
designated "Moody's Investment Grade" ("MIG"). Short-term notes which
have demand features may also be designated as "VMIG". These rating
categories are as follows:
MIG1/VMIG1: Best quality. There is present strong protection by
established cash flows, superior liquidity support or demonstrated
broadbased access to the market for refinancing.
MIG2/VMIG2: High quality. Margins of protection are ample although
not so large as in the preceding group.
- Standard & Poor's Corporation ("S&P"): The following ratings by S&P
for commercial paper (defined by S&P as debt having an original maturity
of no more than 365 days) assess the likelihood of payment:
A-1: Strong capacity for timely payment. Those issues determined to
possess extremely strong safety characteristics are denoted with a plus
sign (+) designation.
A-2: Satisfactory capacity for timely payment. However, the relative
degree of safety is not as high as for issues designated "A-1".
S&P's ratings for Municipal Notes due in three years or less are:
SP-1: Very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics
will be given a plus (+) designation.
SP-2: Satisfactory capacity to pay principal and interest.
S&P assigns "dual ratings" to all municipal debt issues that have a
demand or double feature as part of their provisions. The first rating
addresses the likelihood of repayment of principal and interest as due,
and the second rating addresses only the demand feature. With short-term
demand debt, S&P's note rating symbols are used with the commercial paper
symbols (for example, "SP-1+/A-1+").
- Fitch Investors Service, Inc. Fitch assigns the following short-term
ratings to debt obligations that are payable on demand or have original
maturities of generally up to three years, including commercial paper,
certificates of deposit, medium-term notes, and municipal and investment
notes:
F-1+: Exceptionally strong credit quality; the strongest degree of
assurance for timely payment.
F-1: Very strong credit quality; assurance of timely payment is only
slightly less in degree than issues rated "F-1+".
F-2: Good credit quality; satisfactory degree of assurance for timely
payment, but the margin of safety is not as great as for issues assigned
"F-1+" or "F-1" ratings.
- Duff & Phelps, Inc. The following ratings are for commercial paper
(defined by Duff & Phelps as obligations with maturities, when issued, of
under one year), asset-backed commercial paper, and certificates of
deposit (the ratings cover all obligations of the institution with
maturities, when issued, of under one year, including bankers' acceptance
and letters of credit):
Duff 1+: Highest certainty of timely payment. Short-term liquidity,
including internal operating factors and/or access to alternative sources
of funds, is outstanding, and safety is just below risk-free U.S. Treasury
short-term obligations.
Duff 1: Very high certainty of timely payment. Liquidity factors are
excellent and supported by good fundamental protection factors. Risk
factors are minor.
Duff 1-: High certainty of timely payment. Liquidity factors are
strong and supported by good fundamental protection factors. Risk factors
are very small.
Duff 2: Good certainty of timely payment. Liquidity factors and
company fundamentals are sound. Although ongoing funding needs may
enlarge total financing requirements, access to capital markets is good.
Risk factors are small.
- IBCA Limited or its affiliate IBCA Inc. Short-term ratings,
including commercial paper (with maturities up to 12 months), are as
follows:
A1+: Obligations supported by the highest capacity for timely
repayment.
A1: Obligations supported by a very strong capacity for timely
repayment.
A2: Obligations supported by a strong capacity for timely repayment,
although such capacity may be susceptible to adverse changes in business,
economic, or financial conditions.
- Thomson BankWatch, Inc. The following short-term ratings apply to
commercial paper, certificates of deposit, unsecured notes, and other
securities having a maturity of one year or less.
TBW-1: The highest category; indicates the degree of safety regarding
timely repayment of principal and interest is very strong.
TBW-2: The second highest rating category; while the degree of safety
regarding timely repayment of principal and interest is strong, the
relative degree of safety is not as high as for issues rated "TBW-1".
<PAGE>
Appendix B
Corporate Industry Classifications
Aerospace/Defense
Air Transportation
Auto Parts Distribution
Automotive
Bank Holding Companies
Banks
Beverages
Broadcasting
Broker-Dealers
Building Materials
Cable Television
Chemicals
Commercial Finance
Computer Hardware
Computer Software
Conglomerates
Consumer Finance
Containers
Convenience Stores
Department Stores
Diversified Financial
Diversified Media
Drug Stores
Drug Wholesalers
Durable Household Goods
Education
Electric Utilities
Electrical Equipment
Electronics
Energy Services & Producers
Entertainment/Film
Environmental
<PAGE>
Food
Gas Utilities
Gold
Health Care/Drugs
Health Care/Supplies & Services
Homebuilders/Real Estate
Hotel/Gaming
Industrial Services
Insurance
Leasing & Factoring
Leisure
Manufacturing
Metals/Mining
Nondurable Household Goods
Oil - Integrated
Paper
Publishing/Printing
Railroads
Restaurants
Savings & Loans
Shipping
Special Purpose Financial
Specialty Retailing
Steel
Supermarkets
Telecommunications - Technology
Telephone - Utility
Textile/Apparel
Tobacco
Toys
Trucking
<PAGE>
Oppenheimer Quest Value Fund, Inc.
Two World Trade Center
New York, NY 10048-0203
1-800-525-7048
Investment Adviser
OppenheimerFunds, Inc.
Two World Trade Center
New York, New York 10048-0203
Sub-Adviser
OpCap Advisors
One World Financial Center
New York, New York 10281
Distributor
OppenheimerFunds Distributor, Inc.
Two World Trade Center
New York, New York 10048-0203
Transfer Agent
OppenheimerFunds Services
P.O. Box 5270
Denver, Colorado 80217
1-800-525-7048
Custodian of Portfolio Securities
State Street Bank and Trust Company
P.O. Box 8505
Boston, Massachusetts 02266-8505
Independent Auditors
Price Waterhouse LLP
950 Seventeenth Street
Denver, Colorado 80202
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, New York 10036
No dealer, broker, salesperson or any other person has been authorized
to give any information or to make any representations other than those
contained in this Prospectus or the Additional Statement, and if given or
made, such information and representations must not be relied upon as
having been authorized by the Fund, OppenheimerFunds, Inc.,
OppenheimerFunds Distributor, Inc. or any affiliate thereof. This
Prospectus does not constitute an offer to sell or a solicitation of an
offer to buy any of the securities offered hereby in any state to any
person to whom it is unlawful to make such an offer in such state.
<PAGE>
Part C
Other Information
Item 24. Financial Statements and Exhibits
- ------- --------------------------------
(a) Financial Statements:
--------------------
Included in the Prospectus:
Financial Highlights
Included in Part B:
Audited Financials: Schedule of
Investments, Statement of Assets and Liabilities, Statement of Operations,
Statement of Changes in Net Assets for the fiscal years ended October 31,
1995, Notes to Financial Statements, Financial Highlights, and Independent
Auditors' Report for the fiscal year ended October 31, 1995.
Included in Part C:
None
(b) Exhibits:
--------
(1)Articles of Incorporation: Previously
filed as Exhibit 1 to the original Registration Statement on Form N-1
filed on August 10, 1979, and refiled herewith pursuant to Item 102 of
Regulation S-T.
(2)By Laws: Previously filed as Exhibit
2 to the original Registration Statement on Form N-1 filed on August 10,
1979, and refiled herewith pursuant to Item 102 of Regulation S-T.
(3) Not Applicable.
(4)(i)Specimen Class A Share
Certificate: Filed herewith.
(ii) Specimen Class B Share
Certificate: Filed herewith.
(iii) Specimen Class C Share
Certificate: Filed herewith.
(5)(a)Investment Advisory Agreement:
Filed herewith.
(b)Subadvisory Agreement: Filed
herewith
(6)(a)General Distributor's Agreement:
Filed herewith.
(b)(1)Form of Dealer Agreement of
Oppenheimer Funds Distributor, Inc.: Filed with Post-Effective Amendment
No. 14 of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(2)Form of Oppenheimer Funds
Distributor, Inc. Broker Agreement: Filed with Post-Effective Amendment
No. 14 of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(3)Form of Oppenheimer Funds
Distributor, Inc. Agency Agreement: Filed with Post-Effective Amendment
No. 14 of Oppenheimer Main Street Funds, Inc. (Reg. No. 33-17850),
9/30/94, and incorporated herein by reference.
(4)Broker Agreement between Oppenheimer
Funds Distributor, Inc. and Newbridge Securities dated 10/1/86: Previously
filed with Post-Effective Amendment No. 25 of Oppenheimer Special Fund
(Reg. No. 2-45272), 11/1/86, refiled with Post-Effective Amendment No. 45
of Oppenheimer Special Fund (Reg. No. 2-45272), 8/22/94, pursuant to Item
102 of Regulation S-T, and incorporated herein by reference.
(7) Not Applicable.
(8)Custody Agreement: Previously filed
as Exhibit 8 to Post-Effective Amendment No. 17, and refiled herewith
pursuant to Item 102 of Regulations S-T.
(9) Not Applicable.
(10)Opinion and consent of counsel as
to the legality of the securities being registered, indicating whether
they will when sold be legally issued, fully paid and non-assessable:
Previously filed as an Exhibit to the Registration Statement on Form N-14
(33-41818), 7/19/91.
(11)Consent of Independent Accountants:
Filed herewith.
(12) Not Applicable.
(13)Copy of Investment Letter:
Previously filed as Exhibit 1 to Post-Effective Amendment No. 1.
(14)(i)Form of Individual Retirement
Account Trust Agreement: Filed as Exhibit 14 of Post-Effective Amendment
No. 21 of Oppenheimer U.S. Government Trust (Reg. No. 2-76645), 8/25/93,
and incorporated herein by reference.
(ii)Form of prototype Standardized and
Non-Standardized Profit-Sharing Plan and Money Purchase Pension Plan for
self-employed persons and corporations: Filed with Post-Effective
Amendment No. 3 of Oppenheimer Global Growth & Income Fund (File No. 33-
33799), 1/31/92, and refiled with Post-Effective Amendment No. 7 to the
Registration Statement of Oppenheimer Global Growth & Income Fund (Reg.
No. 33-33799), 12/1/94, pursuant to Item 102 of Regulation S-T, and
incorporated herein by reference.
(iii)Form of Tax-Sheltered Retirement
Plan and Custody Agreement for employees of public schools and tax-exempt
organizations: Filed with Post-Effective Amendment No. 47 to the
Registration Statement of Oppenheimer Growth Fund (Reg. No. 2-45272),
10/21/94, and incorporated herein by reference.
(iv)Form of Simplified Employee Pension
IRA: Filed with Post-Effective Amendment No. 42 to the Registration
Statement of Oppenheimer Equity Income Fund (Reg. No. 2-33043), 10/28/94,
and incorporated herein by reference.
(v)Form of SAR-SEP Simplified Employee
Pension IRA: Filed with Post-Effective Amendment No. 15 to the
Registration Statement of Oppenheimer Mortgage Income Fund, (File No. 33-
6614), 2/20/94, and incorporated herein by reference.
(vi)Form of Prototype 401(k) plan: Filed
with Post-Effective Amendment No. 7 to the Registration Statement of
Oppenheimer Strategic Income & Growth Fund (33-47378), 9/28/95, and
incorporated herein by reference.
(7)Prototype Trust Consultants, Inc.
401(k) Plan: To be filed by Amendment.
(15)(a)Amended and Restated Distribution
and Service Plan and Agreement with respect to Class A shares: Filed
herewith.
(b)Amended and Restated Distribution and
Service Plan and Agreement in respect of Class B shares: Filed
herewith.
(c)Amended and Restated Distribution and
Service Plan and Agreement with respect to Class C shares: Filed
herewith.
(16)Performance Computation Schedule:
Filed herewith.
(17)(1)Financial Data Schedule for Class
A shares: Filed herewith.
(2)Financial Data Schedule for Class B
shares: Filed herewith.
(3)Financial Data Schedule for Class C
shares: Filed herewith.
(18)Oppenheimer Funds Multiple Class
Plan under Rule 18f-3 dated 10/24/95; Filed with Post-Effective Amendment
No. 12 to the Registration Statement of Oppenheimer California Tax-Exempt
Fund (33-23566), 11/1/95, and incorporated herein by reference.
-- Powers of Attorney and Certified Board
Resolutions signed by Registrant's Trustees: Filed with Post-Effective
Amendment No. 36 to Registrant's Registration Statement, 11/24/95 and
incorporated herein by reference.
Item 25. Persons Controlled by or Under Common
Control with Registrant
- ------- ----------------------------------------
- ---------------------
No person is presently controlled by or under common control with
Registrant.
Item 26. Number of Holders of Securities
- ------- -------------------------------
Number of Record
Holders as of
Title of Class January 25, 1996
- -------------- -----------------
Shares of Beneficial Interest
Class A 10,492
Class B 3,277
Class C 781
Item 27. Indemnification
- ------- ---------------
Reference is made to the provisions of Article SEVENTH of
Registrant's Articles of Incorporation filed as Exhibit 24(b)(1) to this
Registration Statement.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of Registrant pursuant to the foregoing provisions
or otherwise, Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by Registrant of expenses incurred or
paid by a director, officer or controlling person of Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person, Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed
in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
Item 28. Business and Other Connections of
Investment Adviser
- -------- ----------------------------------------
- ------------
(a)(i) OppenheimerFunds, Inc. is the investment
adviser of the Registrant; it and certain subsidiaries and affiliates act
in the same capacity to other registered investment companies as described
in Parts A and B hereof and listed in Item 28(b) below.
(a)(ii) OpCap Advisors serves as the sub-adviser
to the Registrant, Oppenheimer Quest for Value Funds and Oppenheimer Quest
Global Value Fund, Inc. The directors and executive officers of OpCap
Advisors, their positions and their other business affiliations and
business experience for the past two years are listed in Item 28(b)
below.
(b) There is set forth below information as
to any other business, profession, vocation or employment of a substantial
nature in which each officer and director of OppenheimerFunds, Inc. is,
or at any time during the past two fiscal years has been, engaged for
his/her own account or in the capacity of director, officer, employee,
partner or trustee.
Name & Current Position Other Business and Connections with
OppenheimerFunds, Inc. During the Past Two Years
- --------------------------- -------------------------------
Lawrence Apolito,
Vice President None.
Victor Babin,
Senior Vice President None.
Robert J. Bishop,
Assistant Vice President Treasurer of the Oppenheimer Funds
(listed below); previously a Fund
Controller for OppenheimerFunds,
Inc. (the "Manager").
Bruce Bartlett,
Vice President Vice President and Portfolio
Manager of Oppenheimer Total Return
Fund, Inc., Oppenheimer Main Street
Funds, Inc. and Oppenheimer
Variable Account Funds; formerly a
Vice President and Senior Portfolio
Manager at First of America
Investment Corp.
George Bowen,
Senior Vice President & Treasurer Treasurer of the New York-based
Oppenheimer Funds; Vice President,
Secretary and Treasurer of the
Denver-based Oppenheimer Funds.
Vice President and Treasurer of
OppenheimerFunds Distributor, Inc.
(the "Distributor") and HarbourView
Asset Management Corporation
("HarbourView"), an investment
adviser subsidiary of the Manager;
Senior Vice President, Treasurer,
Assistant Secretary and a director
of Centennial Asset Management
Corporation ("Centennial"), an
investment adviser subsidiary of
the Manager; Vice President,
Treasurer and Secretary of
Shareholder Services, Inc. ("SSI")
and Shareholder Financial Services,
Inc. ("SFSI"), transfer agent
subsidiaries of the Manager;
President, Treasurer and Director
of Centennial Capital Corporation;
Vice President and Treasurer of
Main Street Advisers.
Michael A. Carbuto,
Vice President Vice President and Portfolio
Manager of Centennial California
Tax Exempt Trust, Centennial New
York Tax Exempt Trust and
Centennial Tax Exempt Trust; Vice
President of Centennial.
William Colbourne,
Assistant Vice President Formerly, Director of Alternative
Staffing Resources, and Vice
President of Human Resources,
American Cancer Society.
Lynn Coluccy,
Vice President Formerly Vice President / Director
of Internal Audit of the Manager.
O. Leonard Darling,
Executive Vice President Formerly Co-Director of Fixed
Income for State Street Research &
Management Co.
Robert A. Densen,
Senior Vice President None.
Robert Doll, Jr.,
Executive Vice President Vice President and Portfolio
Manager of Oppenheimer Growth Fund,
Oppenheimer Variable Account Funds;
Senior Vice President and Portfolio
Manager of Oppenheimer Strategic
Income & Growth Fund; Vice
President of Oppenheimer Quest
Value Fund, Inc., Oppenheimer Quest
Officers Value Fund, Oppen-heimer
Quest For Value Funds and
Oppenheimer Quest Global Value
Fund, Inc.
John Doney,
Vice President Vice President and Portfolio
Manager of Oppenheimer Equity
Income Fund.
Andrew J. Donohue,
Executive Vice President
& General Counsel Secretary of the New York-
basedOppenheimer Funds; Vice
President of the Denver-based
Oppenheimer Funds; Executive Vice
President, Director and General
Counsel of the Distributor;
President and a director of
Centennial, formerly Senior Vice
President and Associate General
Counsel of the Manager and the
Distributor.
Kenneth C. Eich,
Executive Vice President /
Chief Financial Officer Treasurer of Oppenheimer
Acquisition Corporation ("OAC").
George Evans,
Vice President Vice President and Portfolio
Manager of Oppenheimer Global
Emerging Growth Fund.
Scott Farrar,
Assistant Vice President Assistant Treasurer of the
Oppenheimer Funds; previously a
Fund Controller for the Manager.
Katherine P. Feld,
Vice President and Secretary Vice President and Secretary of
OppenheimerFunds Distributor, Inc.;
Secretary of HarbourView, Main
Street Advisers, Inc. and
Centennial; Secretary, Vice
President and Director of
Centennial Capital Corp.
Ronald H. Fielding,
Senior Vice President Chairman of the Board and Director
of Rochester Fund Distributors,
Inc. ("RFD"); President and
Director of Fielding Management
Company, Inc. ("FMC"); President
and Director of Rochester Capital
Advisors, Inc. ("RCAI"); President
and Director of Rochester Fund
Services, Inc. ("RFS"); President
and Director of Rochester Tax
Managed Fund, Inc.; Vice President
and Portfolio Manager of Rochester
Fund Municipals and Rochester
Portfolio Series - Limited Term New
York Municipal Fund.
Jon S. Fossel,
Chairman of the Board and Director Director of OAC, the Manager's
parent holding company; President,
CEO and a director of HarbourView;
a director of SSI and SFSI;
President, Director, Trustee, and
Managing General Partner of the
Denver-based Oppenheimer Funds;
President and Chairman of the Board
of Main Street Advisers, Inc.;
formerly Chief Executive Officer of
the Manager.
Robert G. Galli,
Vice Chairman Trustee of the New York-based
Oppenheimer Funds; Vice President
and Counsel of OAC; formerly he
held the following positions: a
director of the Distributor, Vice
President and a director of
HarbourView and Centennial, a
director of SFSI and SSI, an
officer of other Oppenheimer Funds
and Executive Vice President &
General Counsel of the Manager and
the Distributor.
Linda Gardner,
Assistant Vice President None.
Ginger Gonzalez,
Vice President Formerly 1st Vice President /
Director of Creative Services for
Shearson Lehman Brothers.
Mildred Gottlieb,
Assistant Vice President Formerly served as a Strategy
Consultant for the Private Client
Division of Merrill Lynch.
Dorothy Grunwager, None.
Assistant Vice President
Caryn Halbrecht,
Vice President Vice President and Portfolio
Manager of Oppenheimer Insured Tax-
Exempt Fund and Oppenheimer
Intermediate Tax Exempt Fund; an
officer of other Oppenheimer Funds;
formerly Vice President of Fixed
Income Portfolio Management at
Bankers Trust.
Barbara Hennigar,
President and Chief Executive
Officer of OppenheimerFunds
Services, a division of the Manager President and Director of SFSI.
Alan Hoden,
Vice President None.
Merryl Hoffman,
Vice President None.
Scott T. Huebl,
Assistant Vice President None.
Jane Ingalls,
Assistant Vice President Formerly a Senior Associate with
Robinson, Lake/Sawyer Miller.
Bennett Inkeles,
Assistant Vice President Formerly employed by Doremus &
Company, an advertising agency.
Frank Jennings,
Vice President Portfolio Manager of Oppenheimer
Global Growth & Income Fund.
Formerly a Managing Director of
Global Equities at Paine Webber's
Mitchell Hutchins division.
Stephen Jobe,
Vice President None.
Heidi Kagan,
Assistant Vice President None.
Avram Kornberg,
Vice President Formerly a Vice President with
Bankers Trust.
Paul LaRocco,
Assistant Vice President Portfolio Manager of Oppenheimer
Variable Account Funds and
Oppenheimer Variable Account Funds;
Associate Portfolio Manager of
Oppenheimer Discovery Fund.
Formerly a Securities Analyst for
Columbus Circle Investors.
Mitchell J. Lindauer,
Vice President None.
Loretta McCarthy,
Senior Vice President None.
Bridget Macaskill,
President, Chief Executive Officer
and Director President, Director and Trustee of
the Oppenheimer Funds; President
and a Director of OAC, HarbourView
and Oppenheimer Partnership
Holdings, Inc.; Director of Main
Street Advisers, Inc.; and Chairman
of SSI.
Sally Marzouk,
Vice President None.
Marilyn Miller,
Vice President Formerly a Director of marketing
for TransAmerica Fund Management
Company.
Robert J. Milnamow,
Vice President Vice President and Portfolio
Manager of Oppenheimer Main Street
Funds, Inc. Formerly a Portfolio
Manager with Phoenix Securities
Group.
Denis R. Molleur,
Vice President None.
Kenneth Nadler,
Vice President None.
David Negri,
Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Oppenheimer Asset
Allocation Fund, Oppenheimer
Strategic Income Fund, Oppenheimer
Strategic Income & Growth Fund; an
officer of other Oppenheimer Funds.
Barbara Niederbrach,
Assistant Vice President None.
Stuart Novek,
Vice President Formerly a Director Account
Supervisor for J. Walter Thompson.
Robert A. Nowaczyk,
Vice President None.
Robert E. Patterson,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Main Street
Funds, Inc., Oppenheimer Multi-
State Tax-Exempt Trust, Oppenheimer
Tax-Exempt Fund, Oppenheimer
California Tax-Exempt Fund,
Oppenheimer New York Tax-Exempt
Fund and Oppenheimer Tax-Free Bond
Fund; Vice President of The New
York Tax-Exempt Income Fund, Inc.;
Vice President of Oppenheimer
Multi-Sector Income Trust.
Tilghman G. Pitts III,
Executive Vice President
and Director Chairman and Director of the
Distributor.
Jane Putnam,
Vice President Associate Portfolio Manager of
Oppenheimer Growth Fund; Vice
President and Portfolio Manager of
Oppenheimer Target Fund and
Oppenheimer Variable Account Funds.
Formerly Senior Investment Officer
and Portfolio Manager with Chemical
Bank.
Russell Read,
Vice President Formerly an International Finance
Consultant for Dow Chemical.
Thomas Reedy,
Vice President Vice President of Oppenheimer
Multi-Sector Income Trust and
Oppenheimer Multi-Government Trust;
an officer of other Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
David Robertson,
Vice President None.
Adam Rochlin,
Assistant Vice President Formerly a Product Manager for
Metropolitan Life Insurance
Company.
Michael S. Rosen
Vice President Vice President of RFS; President
and Director of RFD; Vice President
and Director of FMC; Vice President
and director of RCAI; General
Partner of RCA; Vice President and
Director of Rochester Tax Managed
Fund Inc.; Vice President and
Portfolio Manager of Rochester Fund
Series - The Bond Fund For Growth.
David Rosenberg,
Vice President Vice President and Portfolio
Manager of Oppenheimer Limited-Term
Government Fund, Oppenheimer U.S.
Government Trust and Oppenheimer
Integrity Funds. Formerly Vice
President and Senior Portfolio
Manager for Delaware Investment
Advisors.
Richard H. Rubinstein,
Vice President Vice President and Portfolio
Manager of Oppenheimer Asset
Allocation Fund, Oppenheimer Fund
and Oppenheimer Variable Account
Funds; an officer of other
Oppenheimer Funds; formerly Vice
President and Portfolio
Manager/Security Analyst for
Oppenheimer Capital Corp., an
investment adviser.
Lawrence Rudnick,
Vice President Formerly Vice President of Dollar
Dry Dock Bank.
James Ruff,
Executive Vice President None.
Ellen Schoenfeld,
Assistant Vice President None.
Diane Sobin,
Vice President Vice President and Portfolio
Manager of Oppenheimer Gold &
Special Minerals Fund, Oppenheimer
Total Return Fund, Inc. Oppenheimer
Main Street Funds, Inc. and
Oppenheimer Variable Account Funds;
formerly a Vice President and
Senior Portfolio Manager for Dean
Witter InterCapital, Inc.
Nancy Sperte,
Senior Vice President None.
Donald W. Spiro,
Chairman Emeritus and Director Trustee of the New York-based
Oppenheimer Funds; formerly
Chairman of the Manager and the
Distributor.
Arthur Steinmetz,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Strategic
Income Fund, Oppenheimer Strategic
Income & Growth Fund; an officer of
other Oppenheimer Funds.
Ralph Stellmacher,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Champion
Income Fund and Oppenheimer High
Yield Fund; an officer of other
Oppenheimer Funds.
John Stoma,
Vice President Formerly Vice President of Pension
Marketing with Manulife Financial.
James C. Swain,
Vice Chairman of the Board Chairman, CEO and Trustee, Director
or Managing Partner of the Denver-
based Oppenheimer Funds; President
and a Director
of Centennial; formerly President
and Director of OAMC, and Chairman
of the Board of SSI.
James Tobin,
Vice President None.
Jay Tracey,
Vice President Vice President of the Manager; Vice
President and Portfolio Manager of
Oppenheimer Discovery Fund
Oppenheimer Global Emerging Growth
Fund and Oppenheimer Enterprise
Fund. Formerly Managing Director
of Buckingham Capital Management.
Gary Tyc,
Vice President, Assistant
Secretary and Assistant Treasurer Assistant Treasurer of the
Distributor and SFSI.
Jeffrey Van Giesen,
Vice President Formerly employed by Kidder Peabody
Asset Management.
Ashwin Vasan,
Vice President Vice President and Portfolio
Manager of Oppenheimer Multi-Sector
Income Trust, Oppenheimer Multi-
Government Trust and Oppenheimer
International Bond Fund; an officer
of other Oppenheimer Funds.
Valerie Victorson,
Vice President None.
Dorothy Warmack,
Vice President Vice President and Portfolio
Manager of Daily Cash Accumulation
Fund, Inc., Oppenheimer Cash
Reserves, Centennial America Fund,
L.P., Centennial Government Trust
and Centennial Money Market Trust;
Vice President of Centennial.
Christine Wells,
Vice President None.
William L. Wilby,
Senior Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Oppenheimer Global
Fund and Oppenheimer Global Growth
& Income Fund; Vice President of
HarbourView; an officer of other
Oppenheimer Funds.
Susan Wilson-Perez,
Vice President None.
Carol Wolf,
Vice President Vice President and Portfolio
Manager of Oppenheimer Money Market
Fund, Inc., Centennial America
Fund, L.P., Centennial Government
Trust, Centennial Money Market
Trust and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income
Trust; Vice President of
Centennial.
Robert G. Zack,
Senior Vice President and
Assistant Secretary Associate General Counsel of the
Manager; Assistant Secretary of the
Oppenheimer Funds; Assistant
Secretary of SSI, SFSI; an officer
of other Oppenheimer Funds.
Eva A. Zeff,
Assistant Vice President An officer of certain Oppenheimer
Funds; formerly a Securities
Analyst for the Manager.
Arthur J. Zimmer,
Vice President Vice President and Portfolio
Manager of Oppenheimer Variable
Account Funds, Centennial America
Fund, L.P., Centennial Government
Trust, Centennial Money Market
Trust and Daily Cash Accumulation
Fund, Inc.; Vice President of
Oppenheimer Multi-Sector Income
Trust; Vice President of
Centennial; an officer of other
Oppenheimer Funds.
The Oppenheimer Funds include the New York-based Oppenheimer Funds and
the Denver-based Oppenheimer Funds set forth below:
New York-based Oppenheimer Funds
- --------------------------------
Oppenheimer Asset Allocation Fund
Oppenheimer California Tax-Exempt Fund
Oppenheimer Discovery Fund
Oppenheimer Enterprise Fund
Oppenheimer Global Emerging Growth Fund
Oppenheimer Global Fund
Oppenheimer Global Growth & Income Fund
Oppenheimer Gold & Special Minerals Fund
Oppenheimer Growth Fund
Oppenheimer Money Market Fund, Inc.
Oppenheimer Multi-Government Trust
Oppenheimer Multi-Sector Income Trust
Oppenheimer Multi-State Tax-Exempt Trust
Oppenheimer New York Tax-Exempt Fund
Oppenheimer Fund
Oppenheimer Quest Global Value Fund, Inc.
Oppenheimer Quest Value Fund, Inc.
Oppenheimer Quest for Value Funds
Oppenheimer Target Fund
Oppenheimer Tax-Free Bond Fund
Oppenheimer U.S. Government Trust
Denver-based Oppenheimer Funds
- ------------------------------
Oppenheimer Cash Reserves
Centennial America Fund, L.P.
Centennial California Tax Exempt Trust
Centennial Government Trust
Centennial Money Market Trust
Centennial New York Tax Exempt Trust
Centennial Tax Exempt Trust
Daily Cash Accumulation Fund, Inc.
The New York Tax-Exempt Income Fund, Inc.
Oppenheimer Champion Income Fund
Oppenheimer Equity Income Fund
Oppenheimer High Yield Fund
Oppenheimer Integrity Funds
Oppenheimer International Bond Fund
Oppenheimer Limited-Term Government Fund
Oppenheimer Main Street Funds, Inc.
Oppenheimer Strategic Funds Trust
Oppenheimer Strategic Income & Growth Fund
Oppenheimer Tax-Exempt Fund
Oppenheimer Total Return Fund, Inc.
Oppenheimer Variable Account Funds
Rochester-based Funds
- ---------------------
Rochester Fund Municipals
Rochester Fund Series - The Bond Fund For
Growth
Rochester Portfolio Series - Limited Term
New York Municipal Fund
The address of OppenheimerFunds, Inc., the New York-based
Oppenheimer Funds, OppenheimerFunds Distributor, Inc., HarbourView Asset
Management Corp., Oppenheimer Partnership Holdings, Inc., and Oppenheimer
Acquisition Corp. is Two World Trade Center, New York, New York 10048-
0203.
The address of the Denver-based Oppenheimer Funds, Shareholder
Financial Services, Inc., Shareholder Services, Inc., OppenheimerFunds
Services, Centennial Asset Management Corporation, Centennial Capital
Corp., and Main Street Advisers, Inc. is 3410 South Galena Street, Denver,
Colorado 80231.
The address of the Rochester-based funds is 350 Linden Oaks,
Rochester, New York 14625-2807.
Name & Current Position with Other Business and Connections
OpCap Advisors During the Past Two Years
- ------------------------ ----------------------------------
Robert J. Bluestone,
Director of Fixed Income
Management Managing Director of Oppenheimer
Capital; Director of Oppenheimer
Capital Trust Company.
Eugene D. Brody,
Director of Options and
Futures Management Managing Director of Oppenheimer
Capital.
Thomas E. Duggan,
General Counsel & Secretary Managing Director & General Counsel
of Oppenheimer Capital; Assistant
Secretary of Oppenheimer Financial
Corp.
Linda S. Ferrante,
Portfolio Manager Senior Vice President of Oppen-
heimer Capital.
Bernard H. Garil,
President Senior Vice President of Oppen-
heimer Capital and Oppenheimer &
Co., Inc; Director of Oppenheimer
Capital Trust Company.
John Giusio,
Portfolio Manager Vice President of Oppenheimer
Capital.
Richard J. Glasebrook, II,
Portfolio Manager Managing Director of Oppenheimer
Capital.
Colin Glinsman,
Portfolio Manager Senior Vice President of Oppen-
heimer Capital.
Louis Goldstein,
Assistant Portfolio Manager Senior Vice President of Oppen-
heimer Capital.
Matthew Greenwald,
Portfolio Manager Vice President of Oppenheimer
Capital.
Vikki Y. Hanges,
Portfolio Manager Vice President of Oppenheimer
Capital.
Jenny Beth Jones,
Portfolio Manager Senior Vice President of Oppen-
heimer Capital.
Joseph M. LaMotta,
Chairman President of Oppenheimer Capital;
Director & Executive Vice President
of Oppenheimer Financial Corp. and
Oppenheimer Group, Inc.; General
Partner of Oppenheimer & Co., L.P.;
Director of Oppenheimer Capital
Trust Company; Director and
President of Oppenheimer Capital
Limited.
George A. Long,
Director of Research Managing Director of Oppenheimer
Capital.
Elisa A. Mazen,
Portfolio Manager Vice President of Oppenheimer
Capital International Division.
Timothy McCormack,
Portfolio Manager Vice President of Oppenheimer
Capital; formerly Assistant Vice
President of Oppenheimer Capital.
Susan Murphy,
President, Quest Cash
Mgmt. Services President of Quest Cash Management
Services and Oppenheimer Capital
Trust Company; Senior Vice
President of Oppenheimer Capital.
Eileen Rominger,
Portfolio Manager Managing Director of Oppenheimer
Capital.
Sheldon M. Siegel,
Treasurer and Chief Financial
Officer Managing Director/Treasurer/Chief
Financial Officer of Oppenheimer
Capital; Director of Oppenheimer
Capital Trust Company; Treasurer
and Chief Financial Officer of
Oppenheimer Capital Limited.
Bruce E. Ventimiglia,
Chief Operating Officer General Partner of Saratoga Capital
Management; Senior Vice
President/Agent of OCC
Distributors.
Jeffrey Whittington,
Portfolio Manager Senior Vice President of
Oppenheimer Capital.
The address of OpCap Advisors is 200 Liberty Street, New York, New York
10281.
For information as to the business, profession, vocation or
employment of a substantial nature of the officers and trustees
of Oppenheimer Capital, Oppenheimer Capital Trust Company,
Oppenheimer Capital Financial Corp., Oppenheimer Group, Inc.,
Oppenheimer & Co., L.P. and Oppenheimer Capital Limited,
reference is made to Form ADV filed by OpCap Advisors, under the
Investment Advisers Act of 1940, which are incorporated herein
by reference.
Item 29. Principal Underwriter
- -------- ---------------------
(a) OppenheimerFunds Distributor, Inc. is the Distributor of
Registrant's shares. It is also the Distributor of each of the other
registered open-end investment companies for which OppenheimerFunds, Inc.
is the investment adviser, as described in Part A and B of this
Registration Statement and listed in Item 28(b) above.
(b) The directors and officers of the Registrant's principal
underwriter are:
<PAGE>
Positions and
Name & Principal Positions & Offices Offices with
Business Address with Underwriter Registrant
- ---------------- ------------------- -------------
Christopher Blunt Vice President None
6 Baker Avenue
Westport, CT 06880
George Clarence Bowen+ Vice President & Treasurer Vice President
and Treasurer
of the NY-based
Oppenheimer
funds / Vice
President,
Secretary and
Treasurer of
the Denver-
based Oppen-
heimer funds
Julie Bowers Vice President None
21 Dreamwold Road
Scituate, MA 02066
Peter W. Brennan Vice President None
1940 Cotswold Drive
Orlando, FL 32825
Mary Ann Bruce* Senior Vice President - None
Financial Institution Div.
Robert Coli Vice President None
12 Whitetail Lane
Bedminster, NJ 07921
Ronald T. Collins Vice President None
710-3 E. Ponce DeLeon Ave.
Decatur, GA 30030
Bill Coughlin Vice President None
1400 Laurel Avenue
Apt. W710
Minneapolis, MN 55403
Mary Crooks+ Vice President None
Paul Delli-Bovi Vice President None
750 West Broadway
Apt. 5M
Long Beach, NY 11561
Andrew John Donohue* Executive Vice Secretary of
President & Director the New York-
based Oppen-
heimer funds /
Vice President
of the Denver-
based Oppen-
heimer funds
Wendy H. Ehrlich Vice President None
4 Craig Street
Jericho, NY 11753
Kent Elwell Vice President None
41 Craig Place
Cranford, NJ 07016
John Ewalt Vice President None
2301 Overview Dr. NE
Tacoma, WA 98422
Katherine P. Feld* Vice President & Secretary None
Mark Ferro Vice President None
43 Market Street
Breezy Point, NY 11697
Ronald H. Fielding++ Vice President None
Reed F. Finley Vice President - None
1657 Graefield Financial Institution Div.
Birmingham, MI 48009
Wendy Fishler* Vice President - None
Financial Institution Div.
Wayne Flanagan Vice President - None
36 West Hill Road Financial Institution Div.
Brookline, NH 03033
Ronald R. Foster Senior Vice President - None
11339 Avant Lane Eastern Division Manager
Cincinnati, OH 45249
Patricia Gadecki Vice President None
6026 First Ave. South,
Apt. 10
St. Petersburg, FL 33707
Luiggino Galleto Vice President None
10239 Rougemont Lane
Charlotte, NC 28277
Mark Giles Vice President - None
5506 Bryn Mawr Financial Institution Div.
Dallas, TX 75209
Ralph Grant* Vice President/National None
Sales Manager - Financial
Institution Div.
Sharon Hamilton Vice President None
720 N. Juanita Ave. - #1
Redondo Beach, CA 90277
Carla Jiminez Vice President None
609 Chimney Bluff Drive
Mt. Pleasant, SC 29464
Mark D. Johnson Vice President None
7512 Cromwell Dr. Apt 1
Clayton, MO 63105
Michael Keogh* Vice President None
Richard Klein Vice President None
4011 Queen Avenue South
Minneapolis, MN 55410
Hans Klehmet II Vice President None
26542 Love Lane
Ramona, CA 92065
Ilene Kutno* Assistant Vice President None
Wayne A. LeBlang Senior Vice President - None
23 Fox Trail Director Eastern Div.
Lincolnshire, IL 60069
Dawn Lind Vice President - None
7 Maize Court Financial Institution Div.
Melville, NY 11747
James Loehle Vice President None
30 John Street
Cranford, NJ 07016
Laura Mulhall* Senior Vice President - None
Director of Key Accounts
Charles Murray Vice President None
50 Deerwood Drive
Littleton, CO 80127
Joseph Norton Vice President None
1550 Bryant Street
San Francisco, CA 94103
Patrick Palmer Vice President None
958 Blue Mountain Cr.
West Lake Village, CA 91362
Randall Payne Vice President - None
1307 Wandering Way Dr. Financial Institution Div.
Charlotte, NC 28226
Gayle Pereira Vice President None
2707 Via Arboleda
San Clemente, CA 92672
Charles K. Pettit Vice President None
22 Fall Meadow Dr.
Pittsford, NY 14534
Bill Presutti Vice President None
19 Spinnaker Way
Portsmouth, NH 03801
Tilghman G. Pitts, III* Chairman & Director None
Elaine Puleo* Vice President - None
Financial Institution Div.
Minnie Ra Vice President - None
109 Peach Street Financial Institution Div.
Avenel, NJ 07001
Ian Robertson Vice President None
4204 Summit Wa
Marietta, GA 30066
Robert Romano Vice President None
1512 Fallingbrook Drive
Fishers, IN 46038
Michael S. Rosen++ Vice President None
James Ruff* President None
Timothy Schoeffler Vice President None
3118 N. Military Road
Arlington, VA 22207
Mark Schon Vice President None
10483 E. Corrine Dr.
Scottsdale, AZ 85259
Michael Sciortino Vice President None
785 Beau Chene Dr.
Mandeville, LA 70448
James A. Shaw Vice President - None
5155 West Fair Place Financial Institution Div.
Littleton, CO 80123
Robert Shore Vice President - None
26 Baroness Lane Financial Institution Div.
Laguna Niguel, CA 92677
Peggy Spilker Vice President - None
2017 N. Cleveland, #2 Financial Institution Div.
Chicago, IL 60614
Michael Stenger Vice President None
C/O America Building
30 East Central Pkwy
Suite 1008
Cincinnati, OH 45202
George Sweeney Vice President None
1855 O'Hara Lane
Middletown, PA 17057
Scott McGregor Tatum Vice President None
7123 Cornelia Lane
Dallas, TX 75214
David G. Thomas Vice President - None
111 South Joliet Circle Financial Institution Div.
#304
Aurora, CO 80112
Philip St. John Trimble Vice President None
2213 West Homer
Chicago, IL 60647
Gary Paul Tyc+ Assistant Treasurer None
Mark Stephen Vandehey+ Vice President None
Gregory K. Wilson Vice President None
2 Side Hill Road
Westport, CT 06880
William Harvey Young+ Vice President None
* Two World Trade Center, New York, NY 10048-0203
+ 3410 South Galena St., Denver, CO 80231
++ 350 Linden Oaks, Rochester, NY 14625-2807
(c) Not applicable.
Item 30. Location of Accounts and Records
- -------- --------------------------------
The accounts, books and other documents required to be maintained by
Registrant pursuant to Section 31(a) of the Investment Company Act of 1940
and rules promulgated thereunder are in the possession of both
OppenheimerFunds, Inc. at its offices at 3410 South Galena Street, Denver,
Colorado 80231 and MassMutual at its offices at 1295 State Street,
Springfield, Massachusetts 01111.
Item 31. Management Services
- ------- -------------------
Not Applicable.
Item 32. Undertakings
- ------- ------------
(a) Registrant hereby undertakes to assist shareholder communication
in accordance with the provisions of Section 16 of the Investment Company
Act of 1940 and to call a meeting of shareholders for the purpose of
voting upon the question of removal of a Trustee or Trustees when
requested in writing to do so by the holders of at least 10% of the
Registrant's outstanding shares of beneficial interest.
(b) Not applicable.
(c) Registrant hereby undertakes to file a post-effective amendment
containing financial statements for any series portfolio of Registrant,
which need not be certified, within four to six months from the effective
date of the registration statement with respect to such portfolio under
the Securities Act of 1933.
(d) Registrant hereby undertakes to furnish each person to whom a
prospectus is delivered a copy of the Registrant's latest annual report
to shareholders upon request and without charge, if the information called
for by Item 5A of Form N-1A is contained in the latest annual report to
shareholders.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and/or the
Investment Company Act of 1940, the Registrant certifies that it meets all
the requirements for effectiveness of this Registration Statement pursuant
to Rule 485(b) under the Securities Act of 1933 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York and State of New York
on the 12th day of February, 1996.
OPPENHEIMER QUEST VALUE FUND, INC.
By: /s/ Bridget A. Macaskill
----------------------------------
Bridget A. Macaskill
Chairman of the Board and President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in
the capacities and on the dates indicated:
Signatures Title Date
- ---------- ----- ----
/s/ Bridget A Macaskill Chairman of the Board, February 12, 1996
- ----------------------- President (Principal
Bridget A. Macaskill Executive Officer) and
Director
/s/ George C. Bowen Treasurer (Principal February 12, 1996
- ----------------------- Financial and Accounting
Officer)
/s/ Paul Y. Clinton Director February 12, 1996
- -----------------------
Paul Y. Clinton
/s/ Thomas W. Courtney Director February 12, 1996
- -----------------------
Thomas W. Courtney
/s/ Lacy B. Herrmann Director February 12, 1996
- -----------------------
Lacy B. Herrmann
/s/ George Loft Director February 12, 1996
- -----------------------
George Loft
<PAGE>
OPPENHEIMER QUEST VALUE FUND, INC.
Registration No. 2-65223
Post-Effective Amendment No. 37
Index to Exhibits
Exhibit
Number Description
- ------- -----------
24(b)(1) Articles of Incorporation
24(b)(2) Bylaws
24(b)(4)(i) Specimen Share Certificate for Class A Shares
24(b)(4)(ii) Specimen Share Certificate for Class B Shares
24(b)(4)(iii) Specimen Share Certificate for Class C Shares
24(b)(5)(a) Investment Advisory Agreement
24(b)(5)(b) Subadvisory Agreement
24(b)(6)(a) General Distributor's Agreements
24(b)(8) Custody Agreement
24(b)(11) Consent of Independent Auditors
24(b)(15)(a) Amended and Restated Distribution and Service Plan and
Agreements for Class A Shares
24(b)(15)(b) Amended and Restated Distribution and Service Plan and
Agreement for Class B shares.
24(b)(15)(c) Amended and Restated Distribution and Service Plan and
Agreement for Class C shares.
24(b)(16) Performance Computation Schedule
24(b)(17)(1) Financial Data Schedule for Class A Shares
24(b)(17)(2) Financial Data Schedule for Class B Shares
24(b)(17)(3) Financial Data Schedule for Class C Shares
225ptc#1
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
A87857
301 WEST PRESTON STREET
BALTIMORE, MARYLAND 21201
YOU ARE ADVISED THAT THE ARTICLES OF INCORPORATION
OF
QUEST FOR VALUE FUND, INC.
HAVE BEEN RECEIVED AND APPROVED BY THE STATE DEPARTMENT OF ASSESSMENTS AND
TAXATION THIS 6th DAY OF August, 1979, AT 3:00 P.M. AND WILL BE RECORDED.
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION OF MARYLAND
BY: ___________________________________________________
<PAGE>
Exhibit 1(1)
- ---------------------------------------------------------
QUEST FOR VALUE FUND, INC.
- ----------------
Articles of Incorporation
Under the General Corporation Law of Maryland
- ----------------
Filed August 6, 1979
- ----------------
- --------------------------------------------------------
<PAGE>
ARTICLES OF INCORPORATION
OF
QUEST FOR VALUE FUND, INC.
THIS IS TO CERTIFY:
FIRST: I, the subscriber, Thomas F. Konop, the post office address
of whom is One New York Plaza, New York, New York, being at least twenty-
one years of age, do, under and by virtue of the General Laws of the State
of Maryland authorizing the formation of corporations, associate myself
with the indentation of forming a corporation.
SECOND: The name of the corporation (hereinafter called the
Corporation) is QUEST FOR VALUE FUND, INC.
THIRD: The purpose or purposes for which the Corporation is formed
and the business or objects to be transacted, carried on and promoted by
it are as follows:
(1) To hold, invest and reinvest its funds, and in
connection therewith to hold part or all of its funds in cash,
and to purchase or otherwise acquire, hold for investment or
otherwise, sell, assign, negotiate, transfer, exchange or
otherwise dispose of or turn to account or realize upon,
securities (which term "securities" shall for the purposes of
this Article, without limitation of the generality thereof, be
deemed to include any stocks, shares, bonds, debentures, notes,
certificates of deposit issued by banks, mortgages or other
obligations or evidences of indebtedness, and any certificates,
receipts, warrants or other instruments representing rights to
receive, purchase or subscribe for the same, or evidencing or
representing any other rights or interests therein, or in any
property or assets) created or issued by any persons, firms,
associations, corporations, syndicates, combinations,
organizations, governments or subdivisions thereof; and to
exercise, as owner or holder of any securities, all rights,
powers and privileges in respect thereof; and to do any and all
acts and things for the preservation, protections, improvement
and enhancement in value of any and all such securities.
(2) To issue and sell shares of its own capital stock in
such amounts and on such terms and conditions, for such purposes
and for such amount or kind of consideration (including, without
limitation thereto, securities) now or hereafter permitted by
the laws of Maryland and by these Articles of Incorporation, as
its Board of Directors may determine; provided, however, that
the consideration per share to be received by the Corporation
upon the sale of any shares of its capital stock shall not be
less than the net asset value per share of such capital stock
outstanding at the time as of which the computation of such net
asset value shall be made.
(3) To purchase or otherwise acquire, hold, dispose of,
resell, transfer, reissue or cancel (all without the vote or
consent of the stockholders of the Corporation) shares of its
capital stock, in any manner and to the extent now or hereafter
permitted by the laws of said State and by these Articles of
Incorporation.
(4) To conduct its business in all its branches at one or
more offices in Maryland and elsewhere in any part of the world,
without restriction or limit as to extent.
(5) To carry out all or any of the foregoing objects and
purposes as principal or agent, and alone or with associates or,
to the extent now or hereafter permitted by the laws of
Maryland, as a member of, or as the owner or holder of any stock
of, or shares of interest in, any firm, association,
corporation, trust or syndicate; and in connection therewith to
make or enter into such deeds or contracts with any persons,
firms, associations, corporations, syndicates, governments or
subdivisions thereof, and to do such acts and things and to
exercise such powers, as a natural person could lawfully make,
enter into, do or exercise.
(6) To do any and all such further acts and things and to
exercise any and all such further powers as may be necessary,
incidental, relative, conducive, appropriate or desirable for
the accomplishment, carrying out or attainment of all or any of
the foregoing purposes or objects.
The foregoing objects and purposes shall, except as otherwise
expressly provided, be in no way limited or restricted by reference to,
or inference from, the terms of any other clause of this or any other
Article of these Articles of Incorporation, and shall each be regarded as
independent and construed as powers as well as objects and purposes, and
the enumeration of specific purposes, objects and powers shall not be
construed to limit or restrict in any manner the meaning of general terms
or the general powers of the Corporation now or hereafter conferred by the
laws of the State of Maryland, nor shall the expression of one thing be
deemed to exclude another, though it be of like nature, not expressed;
provided, however, that the Corporation shall not have the power to carry
on within the State of Maryland any business whatsoever the carrying on
of which would preclude it from being classified as an ordinary business
corporation under the laws of said State; nor shall it carry on any
business, or exercise any powers, in any other state, territory, district
or country except to the extent that the same may lawfully be carried on
or exercised under the laws thereof.
FOURTH: The post office address of the principal office of the
Corporation in the State of Maryland is c/o United States Corporation
Company, 1300 Mercantile Bank & Trust Building, Baltimore, Maryland 21201.
The Corporation's resident agent is United States Corporation
Company, whose post office address is 1300 Mercantile Bank & Trust
Building, Baltimore, Maryland 21201. Said resident agent is a corporation
of the State of Maryland.
FIFTH:
(1) The total number of shares of stock which the
Corporation has authority to issue, is 35,000,000 shares of
capital stock of the par value of $1 each, all of one class, and
of the aggregate par value of $35,000,000.
(2) At all meetings of stockholders each stockholder of
the Corporation shall be entitled to one vote for each share of
stock standing in his name on the books of the Corporation on
the date, fixed in accordance with the By-Laws, for
determination of stockholders entitled to vote at such meeting.
Any fractional share shall carry proportionately all the rights
of a whole share, including the right to vote and the right to
receive dividends. The presence in person or by proxy of the
holders of a majority of the shares of capital stock of the
Corporation outstanding and entitled to vote thereat shall
constitute a quorum at any meeting of the stockholders. If at
any meeting of the stockholders there shall be less than a
quorum present, the stockholders present at such meeting may,
without further notice, adjourn the same from time to time until
a quorum shall attend, but no business shall be transacted at
any such adjourned meeting except such as might have been
lawfully transacted had the meeting not been adjourned.
(3) Upon delivery of the shares of the Corporation to its
first subscribing stockholders, the Corporation shall be an
open-end investment company and:
(a) Each holder of the capital stock of the
Corporation, upon request to the Corporation accompanied
by surrender of the appropriate stock certificate or
certificates, if any, in proper form for transfer, shall
be entitled to require the Corporation to redeem all or
any part of the shares of capital stock standing in the
name of such holder on the books of the Corporation, at a
redemption price equal to the net asset value of such
shares. The method of computing such net asset value, the
time as of which such net asset value shall be computed
and the time within which the Corporation shall make
payment therefor, shall be determined as hereinafter
provided in Article SEVENTH of these Articles of
Incorporation. Notwithstanding the foregoing, the Board
of Directors of the Corporation may suspend the right of
the holders of the capital stock of the Corporation to
require the Corporation to redeem shares of such capital
stock.
(i) for any period (A) during which the New York
Stock Exchange is closed other than the customary
weekend and holiday closings, or (B) during which
trading on the New York Stock Exchange is restricted;
(ii) for any period during which an emergency,
as defined by rules of the Securities and Exchange
Commission or any successor thereto, exists as a
result of which (A) disposal by the Corporation of
securities owned by it is not reasonably practicable,
or (B) it is not reasonably practicable for the
Corporation fairly to determine the value of its net
assets; or
(iii) for such other periods as the Securities
and Exchange Commission or any successor thereto may
by order permit for the protection of security
holders of the Corporation.
(b) On and after such time all shares of the capital
stock of the Corporation now or hereafter authorized shall
be subject to redemption and redeemable at the option of
the stockholder, in the sense used in the General Laws of
the State of Maryland authorizing the formation of
corporations, at the redemption price for any such shares,
determined in the manner set out in these Articles of
Incorporation or in any amendment thereto. In the absence
of any specification as to the purposes for which shares
of the capital stock of the Corporation are redeemed or
repurchased by it, all shares so redeemed or repurchased
shall be deemed to be acquired for retirement in the sense
contemplated by the laws of the State of Maryland and the
number of the authorized shares of the capital stock of
the Corporation shall not be reduced by the number of any
shares redeemed or repurchased by it.
(4) Notwithstanding any provision of law requiring
any action to be taken or authorized by the affirmative
vote of the holders of a majority or other designated
proportion of the shares, or to be otherwise taken or
authorized by a vote of the stockholders, such action
shall be effective and valid if taken or authorized by the
affirmative vote of the holders of a majority of the total
number of shares outstanding and entitled to vote thereon
pursuant to the provisions of these Articles of
Incorporation.
(5) No holder of stock of the Corporation shall, as
such holder, have any right to purchase or subscribe for
any shares of the capital stock of the Corporation of any
class or any other security of the Corporation which it
may issue or sell (whether out of the number of shares
authorized by these Articles of Incorporation, or out of
any shares of the capital stock of the Corporation
acquired by it after the issue thereof, or otherwise)
other than such right, if any, as the Board of Directors,
in its discretion, may determine.
(6) All persons who shall acquire stock in the
Corporation shall acquire the same subject to the
provisions of these Articles of Incorporation.
SIXTH: The number of Directors of the Corporation shall be give,
and the names of those who shall act as such until the first annual
meeting or until their successors are duly chosen and qualify are as
follows:
Edmund T. Delaney Sidney M. Robbins
Charles H. Brunie Joseph M. McDaniel, Jr.
Charles Dreifus
However, the By-Laws of the Corporation may fix the number of
Directors at a number greater than that named in these Articles of
Incorporation and may authorize the Board of Directors, by the vote of a
majority of the entire Board of Directors, to increase or decrease the
number of Directors fixed by these Articles of Incorporation or by the By-
Laws within limits specified in the By-Laws, provided that in no case
shall the number of Directors be less than three, and to fill the
vacancies created by any such increase in the number of Directors. Unless
otherwise provided by the By-Laws of the Corporation, the Directors of the
Corporation need not be stockholders therein.
SEVENTH: The following provisions are hereby adopted for the purpose
of defining, limiting and regulating the powers of the Corporation and of
the Directors and stockholders.
(1) The By-Laws of the Corporation may divide the
Directors of the Corporation into classes and prescribe the
tenure of office of the several classes, but no class shall be
elected for a period shorter than that from the time of the
election following the division into classes until the next
annual meeting and thereafter for a period shorter than the
interval between annual meetings or for a period longer than
five years, and the term of office of at least one class shall
expire each year. Notwithstanding the foregoing, no such
division into classes shall be made prior to the first annual
meeting of stockholders of the Corporation.
(2) The holders of shares of the capital stock of the
Corporation shall have the right to inspect the records,
documents, accounts and books of the Corporation, subject to
reasonable regulations of the Board of Directors, not contrary
to Maryland law, as to whether and to what extent, and at what
times and places, and under what conditions and regulations,
such right shall be exercised.
(3) Any Director, or any officer elected or appointed by
the Board of Directors or by any committee of said Board or by
the stockholders or otherwise, may be removed at any time, with
or without cause, in such lawful manner as may be provided in
the By-Laws of the Corporation.
(4) If the By-Laws so provide, the Board of Directors of
the Corporation shall have power to hold their meetings, to have
an office or offices and, subject to the provisions of the laws
of Maryland, to keep the books of the Corporation outside of
said State at such places as may from time to time be designated
by them.
(5) In addition to the powers and authority hereinbefore
or by statute expressly conferred upon them, the Board of
Directors may exercise all such powers and do all such acts and
things as may be exercised or done by the Corporation, subject,
nevertheless, to the express provisions of the laws of Maryland,
of these Articles of Incorporation and of the By-Laws of the
Corporation.
(6) Shares of stock in other corporations shall be voted
in person or by proxy by the President or a Vice-President, or
such officer or officers of the Corporation as the Board of
Directors shall designate for the purpose, or by proxy or
proxies thereunto duly authorized by the Board of Directors,
except as otherwise ordered by vote of the holders of a majority
of the shares of the capital stock of the Corporation
outstanding and entitled to vote in respect thereto.
(7)(a) Subject to the provisions of the Investment Company
Act of 1940, any director, officer or employee individually, or
any partnership of which any director, officer or employee may
be a member, or any corporation or association of which any
director, officer or employee may be an officer, director,
trustee, employee or stockholder, may be a party to, or may be
pecuniarily or otherwise interested in, any contract or
transaction of the Corporation, and in the absence of fraud no
contract or other transaction shall be thereby affected or
invalidated; provided that in case a director, or a partnership,
corporation or association of which a director is a member,
officer, director, trustee, employee or stockholder is so
interested, such fact shall be disclosed or shall have been
known to the Board of Directors or a majority thereof; and any
director of the Corporation who is so interested, or who is also
a director, officer, trustee, employee or stockholder of such
other corporation or association or a member of such partnership
which is so interested, may be counted in determining the
existence of a quorum at any meeting of the Board of Directors
of the Corporation which shall authorize any such contract or
transaction, and may vote thereat to authorize any such contract
or transaction, with like force and effect as if he were not
such director, officer, trustee, employee or stockholder of such
other corporation or association or not so interested or a
member of a partnership so interested.
(b) Specifically, but without limitation of the foregoing,
the Corporation may enter into a management or supervisory
contract and other contracts with, and may otherwise do business
with, Oppenheimer Capital Corporation, a New York corporation,
or any of its parent, subsidiary or affiliated corporations,
notwithstanding that the Board of Directors of the Corporation
may be composed in part of directors, officers or employees of
any of said corporations, and officers of the Corporation may
have been or may be or become directors, officers or employees
of any of said corporations, and in the absence of fraud the
Corporation and said corporations may deal freely with each
other, and neither such management or supervisory contract nor
any other contract or transaction between the Corporation and
any of said corporations shall be invalidated or in any wise
affected thereby, nor shall any director or officer of the
Corporation be liable to the Corporation or to any stockholder
or creditor thereof or to any other person for any loss incurred
by it or him under or by reason of any such contract or
transaction; provided that nothing herein shall protect any
director or officer of the Corporation against any liability to
the Corporation or to its security holders to which he would
otherwise be subject by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties
involved in the conduct of his office; and provided always that
such contract or transaction shall have been on terms that were
not unfair at the time at which it was entered into.
(c) The Corporation shall indemnify each and all of its
directors and officers and former directors and officers and any
person who may have served at its request as a director or
officer of another corporation in which it owns shares of
capital stock or of which it is a creditor against expenses,
including attorneys' fees, actually and necessarily incurred by
them in connection with the defense of any action, suit or
proceeding in which they, or any of them, are made parties or
a party by reason of being or having been directors or officers
or a director or officer of the Corporation, or of such other
corporation, except in relation to matters as to which any such
director or officer or former director or officer or person
shall be adjudged in such action, suit or proceeding to be
liable for negligence or misconduct (which as used herein
include, without limitation, willful misfeasance, bad faith,
gross negligence and reckless disregard of the duties involved
in the conduct of his office) in the performance of duty;
provided, however, that such indemnification shall not cover
liabilities in connection with any matter which shall be
disposed of through payment of a compromise settlement by such
director or officer or person, pursuant to a consent decree or
otherwise, without adjudication, unless two-thirds of these
members of the Board of Directors who are not involved in the
action, suit or proceeding, or the holders of a majority of the
outstanding stock of the Corporation at the time having the
right to vote for directors, not counting any stock owned by any
interested director, officer or person, by a vote or in writing,
determine that the director or officer or the other person to
be indemnified, has no liability by reason of negligence or
misconduct, and provided further that if a majority of the
members of the Board of Directors of the Corporation are
involved in the action, suit or proceeding, such determination
shall have been made either by the stockholders as provided
above or by a written opinion of independent counsel; that
amounts paid in such settlement shall not exceed the costs,
fees, and expenses which would have been reasonably incurred if
the action, suit or proceeding had been litigated to a
conclusion; and that such a determination by the Board of
Directors or by the stockholders or by independent counsel, and
the payments of amounts by the Corporation on the basis thereof,
shall not prevent a stockholder from challenging such
indemnification by appropriate legal proceedings on the grounds
that the person indemnified was liable to the Corporation or the
stockholders by reason of negligence or misconduct. The rights
of indemnification hereby provided shall not be exclusive of or
affect other rights to which any director or officer may
otherwise be entitled.
(8) For purposes of the computation of net asset value,
as in these Articles of Incorporation referred to, the following
rules shall apply:
(a) The net asset value of each share of capital
stock of the Corporation duly surrendered to the
Corporation for redemption pursuant to the provisions of
paragraph (3)(a) of Article FIFTH of these Articles of
Incorporation shall be determined as of the close of
business on the New York Stock Exchange (or as otherwise
permitted by law or no-action letter from the Staff of the
Securities and Exchange Commission) next succeeding the
time when such capital stock is so surrendered.
(b) The net asset value of each share of the capital
stock of the Corporation for the purpose of the issue of
such capital stock shall be determined either as of the
close of business on the last business day on which the
New York Stock Exchange and be applicable to all purchase
orders received prior thereto and subsequent to the
previous determination or in accordance with any provision
of the Investment Company Act of 1940, any rule or
regulation thereunder, or any rule or regulation made or
adopted by any securities association registered under the
Securities Exchange Act of 1934.
(c) The net asset value of each share of the capital
stock of the Corporation, as of the close of business on
any day, shall be the quotient obtained by dividing the
value, as at such close, of the net assets of the
Corporation (i.e., the value of the assets of the
Corporation less its liabilities exclusive of capital
stock and surplus) by the total number of shares of
capital stock outstanding at such close. In determining
the value of the assets, each security traded on a
national securities exchange (except such as to which the
marketability may be restricted) is valued at the last
reported sale price on such exchange on that day. If
there has been no such sale on such day or on the previous
day on which such exchange was open (if a week has not
elapsed between such days), then the value of such
security is taken to be the reported bid price at the time
as of which the value is being ascertained. However, if
such price does not reasonably reflect the true market
value, then the value is taken at such amount as is deemed
responsible, but not less than said bid price nor more
than said asked price. Any security not traded on a
securities exchange but traded in the over-the-counter
market is valued at its last quoted bid price. Any
securities or other assets for which market quotations are
not readily available are valued at fair value as
determined in good faith by the Board of Directors.
Similarly, the Board will fix the value of securities
whose marketability is restricted. Liabilities for
accounts payable are stated at face amounts payable
therefor, expenses and taxes are accrued monthly at
estimated amounts, and dividends payable by the
Corporation are deducted as of the close of business on
the record date. No accrual is made for taxes on
unrealized appreciation of securities owned by the
Corporation unless the directors determine otherwise.
For the purposes hereof
(A) Capital stock subscribed for shall be deemed
to be outstanding as of the time of acceptance of any
subscription and the entry thereof on the books of
the Corporation and the net price thereof shall be
deemed to be an asset of the Corporation; and
(B) Capital stock surrendered for redemption by
the Corporation pursuant to the provisions of
paragraph (3)(a) of Article FIFTH of these Articles
of Incorporation shall be deemed to be outstanding
until the close of business on the date as of which
such value is being determined as provided in
paragraph 8(a) of this Article SEVENTH and thereupon
and until paid the price thereof shall be deemed to
be a liability of the Corporation.
(d) The net asset value of each share of the capital
stock of the Corporation, as of any time other than the
close of business on any day, may be determined by
applying to the net asset value as of the close of
business on the preceding business day, computed as
provided in paragraph 8(c) of this Article SEVENTH, such
adjustments as are authorized by or pursuant to the
direction of the Board of Directors and designed
reasonably to reflect any material changes in the market
value of securities and other assets held and any other
material changes in the assets or liabilities of the
Corporation and in the number of its outstanding shares
which shall have taken place since the close of business
on such preceding business day.
(e) In addition to the foregoing, the Board of
Directors is empowered, in its absolute discretion, to
establish other bases or times, or both, for determining
the net asset value of each share of the capital stock of
the Corporation.
(f) Except as otherwise permitted by the Investment
Company Act of 1940, payment of the redemption price of
capital stock of the corporation surrendered to it for
redemption pursuant to the provisions of paragraph 3(a) of
Article FIFTH of these Articles of Incorporation shall be
made by the Corporation within seven (7) days after
surrender of such stock to the Corporation for such
purpose. Any such payment may be made in whole or in part
in portfolio securities of the Corporation or in cash, as
the Board of Directors shall deem advisable, and no
stockholder shall have a right, other than as determined
by the Board of Directors, to have his shares redeemed in
kind. For the purpose of determining the amount of any
payment to be made, pursuant to paragraph (3)(a) of said
Article FIFTH, in portfolio securities, such securities
shall be valued as provided in subdivision (c) of
paragraph (8) of this Article SEVENTH.
EIGHTH: From time to time any of the provisions of these Articles
of Incorporation may be amended, altered or repealed (including any
amendment which changes the terms of any of the outstanding stock by
classification, reclassification or otherwise), upon the vote of the
holders of a majority of the shares of capital stock of the Corporation
at the time outstanding and entitled to vote, and other provisions which
might under the statutes of the State of Maryland at the time in force be
lawfully contained in Articles of Incorporation, may be added or inserted
upon the vote of the holders of a majority of the shares of capital stock
of the Corporation at the time outstanding and entitled to bote, and all
rights at any time conferred upon the stockholders of the Corporation by
these Articles of Incorporation are granted subject to the provisions of
this Article EIGHTH. The Corporation shall notify the stockholders in its
next subsequent regular report to the stockholders of any amendment to
these Articles of Incorporation.
The term "these Articles of Incorporation" as used herein and in the
By-Laws of the Corporation shall be deemed to mean these Articles of
Incorporation as from time to time amended and restated.
<PAGE>
IN WITNESS WHEREOF, I have signed these Articles of Incorporation on
this 2nd day of August, 1979.
______________________
Thomas F. Konop
WITNESS:
_________________
Diane Masino
STATE OF NEW YORK )
ss:
COUNTY OF NEW YORK )
This is to certify that on this 2nd day of August, 1979, before me,
the subscriber, a Notary Public of the State of New York, personally
appeared Thomas F. Konop, and acknowledged the foregoing Articles of
Incorporation to be his act.
Witness my hand and Notarial Seal the day and year last above
written.
(SEAL)
_________________________________
DINA A. CHIARELLI
Notary Public, State of New York
No. 24-4603847
Qualified in Kings County
Commission Expires March 30, 1981
<PAGE>
No. 33892 A
STATE OF MARYLAND
STATE DEPARTMENT OF ASSESSMENTS AND TAXATION
301 WEST PRESTON STREET
BALTIMORE 21201
THIS IS TO CERTIFY THAT the within instrument is a true copy of the
ARTICLES OF INCORPORATION
OF
QUEST FOR VALUE FUND, INC.
as approved and received for record by the State Department of Assessments
and Taxation of Maryland, August 6, 1979 at 3:00 o'clock P.M.
AS WITNESS my hand and official Seal of the said Department at
Baltimore this 8th day of August, 1979.
____________________
DEAN W. KITCHEN
CHARTER SPECIALIST
EXHIBIT B
QUEST FOR VALUE FUND, INC.
(A Maryland Corporation)
BY-LAWS
As adopted on
August 7, 1979
<PAGE>
BY-LAWS
ARTICLE I
STOCKHOLDERS
SECTION 1. Place of Meeting. All meetings of the stockholders
shall be held at the principal office of the Corporation in the State of
Maryland or at such other place within the United States as may be fixed
by the Board of Directors and stated in the notice of meeting.
SECTION 2. Annual Meetings. The annual meeting of the stockholders
of the Corporation shall be held at such hour as may be determined by the
Board of Director and as shall be designated in the notice of meeting and
on such date within 31 days after the 1st day of March in each year as may
be fixed by the Board of Directors, for the purpose of electing directors
and for the transaction of such other business as may properly be brought
before the meeting.
SECTION 3. Special or Extraordinary Meetings. Special or
extraordinary meetings of the stockholders for any purpose or purposes may
be called by the Chairman of the Board of Directors, if any, or by the
President or by the Board of Directors, and shall be called by the
Secretary upon receipt of the request in writing signed by stockholders
holding not less than one quarter in amount of the entire capital stock
issued and outstanding and entitled to vote thereat. Such request shall
state the purpose or purposes of the proposed meeting. Special meetings
requested by shareholders need not be called unless (i) required by law
and (ii) all conditions to the calling of such special meeting required
by law have been met.
SECTION 4. Notice of Meetings of Stockholders. Not less than ten
days' and not more than ninety days' written or printed notice of every
meeting of stockholders, stating the time and place thereof (and the
general nature of the business proposed to be transacted at any special
or extraordinary meeting), shall be given to each stockholder entitled to
vote thereat either by mail or by presenting it to him personally or by
leaving it at his residence or usual place of business. If mailed, such
notice shall be deemed to be given when deposited in the United States
mail addressed to the stockholder at this post office address as it
appears on the records of the Corporation, with postage thereon prepaid.
No notice of the time, place or purpose of any meeting of
stockholders need be given to any stockholder who attends in person or by
proxy or to any stockholder who, in writing executed and filed with the
records of the meeting, either before or after the holding thereof, waives
such notice.
SECTION 5. Record Dates. The Board of Directors may fix, in
advance, a date, not exceeding sixty days and not less than ten days
preceding the date of any meeting of stockholders, and not exceeding sixty
days preceding any dividend payment date or any date for the allotment of
rights, as a record date for the determination of the stockholders
entitled to notice of and to vote at such meeting, or entitled to receive
dividend or rights, as the case may be, and only stockholders of record
on such date shall be entitled to notice of and to vote at such meeting
to receive such dividend or rights, as the case may be.
SECTION 6. Quorum, Adjournment of Meetings. The presence in person
or by proxy of the holders of record of a majority of the shares of the
capital stock of the Corporation issued and outstanding and entitled to
vote thereat, shall constitute a quorum at all meetings of the
stockholders. If at any meeting of the stockholders there shall be less
than a quorum present, the stockholders present at such meeting may,
without further notice, adjourn the same from time to time until a quorum
shall attend, but no business shall be transacted at any such adjourned
meeting except such as might have been lawfully transacted had the meeting
not been adjourned.
SECTION 7. Voting and Inspectors. At all meetings of stockholders
every stockholder of record entitled to vote thereat shall be entitled to
one vote for each share of stock standing in his name on the books of the
Corporation (and such stockholders of record holding fractional shares
shall have proportionate voting rights as provided in the Articles of
Incorporation) on the date for the determination of stockholders entitled
to vote at such meeting, either in person or by proxy appointed by
instrument in writing subscribed by such stockholder or his duly
authorized attorney. No proxy which is attempted to be used more than
eleven months after its date shall be accepted, unless such proxy shall,
on its face, name a longer period for which it is to remain in force.
All elections shall be had and all questions decided by a majority
of the votes cast at a duly constituted meeting, except as otherwise
provided in the Articles of incorporation or in these By-Laws or by
specific statutory provision superseding the restrictions and limitations
contained in the Articles of Incorporation or in these By-Laws.
At any election of Directors, the Board of Directors prior thereto
may, or, if they have not so acted, the chairman of the meeting, may, and
upon the request of the holders of ten per cent (10%) of the stock
entitled to vote at such election shall, appoint two inspectors of
election who shall first subscribe an oath or affirmation to execute
faithfully the duties of inspectors at such election with strict
impartiality and according to the best of their ability, and shall after
the election make a certificate of the result of the vote taken. No
candidate for the office of Director shall be appointed such Inspector.
The chairman of the meeting may cause a vote by ballot to be taken
upon any election or matter, and such vote shall be taken upon the request
of the holders of ten per cent (10%) of the stock entitled to vote on such
election or matter.
SECTION 8. Conduct of Stockholders' Meetings. The meetings of the
stockholders shall be presided over by the Chairman of the Board, if any,
or, or he shall not be present, by the President, or if he shall not be
present, by a Vice President, or if none of them is present, by a chairman
to be elected at the meeting. The Secretary of the Corporation, if
present, shall act as secretary of such meetings, or if he is not present,
as Assistant Secretary shall so act: if neither the Secretary nor an
Assistant Secretary is present, then the chairman of the meeting shall
appoint its secretary.
SECTION 9. Concerning Validity of Proxies, Ballots, Etc. At every
meeting of the stockholders, all proxies shall be received and taken in
charge of and all ballots shall be received and canvassed by the secretary
of the meeting, who shall decide all questions touching the qualification
of voters., the validity of the proxies and the acceptance or rejection
of votes, unless inspectors of election shall have been appointed as
provided in Section 7, in which event such inspectors of election shall
decide all such questions.
ARTICLE II
BOARD OF DIRECTORS
SECTION 1. Number and Tenure of Office. The business and affairs
of the Corporation shall be conducted and managed by a Board of Directors
consisting of that number of Directors specified in the Articles of
Incorporation of the Corporation as originally filed which number may be
increased or decreased as provided in Section 3 of this Article. Each
director shall hold office until the annual meeting of stockholders of the
Corporation next succeeding his election or until his successor is duly
elected and qualifies. Directors need not be stockholders.
SECTION 2. Vacancies. Subject to the provisions of the Investment
Company Act of 1940 or any rule, regulation or order thereunder
(collectively, the "1940" Act), in case of any vacancy in the Board of
Directors through death, resignation, removal, or other cause a majority
of the remaining Directors, although such majority is less than a quorum,
by an affirmative vote, may elect a successor to hold office until the
next annual meeting of the stockholders of the Corporation or until his
successor is duly elected and qualifies.
SECTION 3. Increase or Decrease in Number of Directors: Removal.
Subject to the 1940 Act, the Board of Directors, by the vote of a majority
of the entire Board, may increase the number of Directors to a number not
exceeding fifteen, and may elect Directors to fill the vacancies created
by any such increase in the number of Directors and to hold office until
the next annual meeting of the stockholders or until their successors are
duly elected and qualify. The Board of Directors, by the vote of a
majority of the entire Board, may likewise decrease the number of
Directors to a number not less than three, but the tenure of office of any
Director shall not be affected by any such decrease made by the Board.
Any director may at any time be removed either with or without cause by
resolution duly adopted by the affirmative votes of the holders of a
majority of the shares of the capital stock of the Corporation present in
person or by proxy at any meeting of stockholders provided that a quorum
is present or by such larger vote as may be required by Maryland law. Any
director may at any time be removed for cause by resolution duly adopted
at any meeting of the Board of Directors provided that notice thereof is
contained in the notice of such meeting and that such resolution is
adopted by the vote of at least two thirds of those directors who removal
is not proposed. As used here "for cause" shall mean any cause which
under Maryland law would permit the removal of a director elected by
cumulative voting.
SECTION 4. Place of Meeting. The Directors may hold their meeting,
have one or more offices, and keep the books of the Corporation outside
the State of Maryland, at any office or offices of the Corporation or at
any other place as they may from time to time by resolution determine, or,
in the case of meetings, as shall be specified or fixed in the respective
notices or waivers of notice thereof.
SECTION 5. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such time and on such notice, if any, as the
Directors may from time to time determine. The annual meeting of the
Board of Directors shall be held as soon as practicable after the annual
meeting of the stockholders for the election of Directors.
SECTION 6. Special Meetings. Special meetings of the Board of
Directors may be held from time to time upon call of the Chairman of the
Board of Directors, if any, or the President or a majority of the
Directors, by oral or telegraphic or written notice duly served on or sent
or mailed to each Director not less than one day before each such meeting.
NO notice need be given to any Director who attends in person or to any
Director who, in writing executed and filed with records of the meeting
either before or after the holding thereof, waives such notice. Such
notice or waiver of notice need not state the purpose or purposes of such
meeting.
SECTION 7. Quorum. One-third of the entire Board of Directors
shall constitute a quorum for the transaction of business, provided that
a quorum shall in no case be less than two Directors. If at nay meeting
of the Board there shall be less than a quorum present, a majority of
those present may adjourn the meeting from time to tie until a quorum
shall have been obtained. The action of a majority of the Directors
present at any meeting at which there is a quorum shall be the action of
the Board of Directors, except as may be otherwise specifically provided
by statute, by the Articles of Incorporation, or, these By-Laws.
SECTION 8. Executive Committee. The Board of Directors may, in
each year, by the affirmative vote of a majority of the entire Board,
appoint from the Directors an Executive Committee to consist of such
number of Directors (not less than three) as the Board may from time to
time determine. The Board of Directors by such affirmative vote shall
have power at any time to change the members of such Committee and may
fill vacancies in the Committee by appointment from the Directors. When
the Board of Directors is not in session, the Executive Committee shall
have and may exercise any or all of the powers of the Board of Directors
in the management of the business and affairs of the Corporation
(including the power to authorize the seal of the Corporation to be
affixed to all papers which may require it) except as provided by law.
The Executive Committee may fix its own rules of procedure, and may meet
when and as provided by such rules or by resolution of the Board of
Directors, but in every case the presence of a majority shall be necessary
to constitute a quorum. In the absence of any member of the Executive
Committee, the members thereof present at any meeting, whether or not they
constitute a quorum, may appoint a member of the Board of Directors to act
in the place of such absent member.
SECTION 9. Other Committees. The Board of Directors, by the
affirmative vote of a majority of the entire Board, may appoint other
committees which shall in each case consist of such number of members (not
less than two) and shall have and may exercise, to the extent permitted
by law, such powers as the Board may determine in the resolution
appointing them. A majority of all members of any such committee may
determine its action, and fix the time and place of its meetings, unless
the Board of Directors shall otherwise provide. The Board of Directors
shall have power at any time to change the members and, to the extent
permitted by law, the powers of any such committee, to fill vacancies, and
to discharge any such committee.
SECTION 10. Informal Action by Directors and Committees: Any
action required or permitted to be taken at any meeting of the Board of
Directors or any Committee thereof may, except as otherwise required by
the 1940 Act, be taken without a meeting if a written consent to such
action is signed by all members of the Board, or of such committee, as the
case may be and filed with the minutes of the precedings of the Board or
committee. Subject to the 1940 Act, members of the Board of Directors or
a committee thereof may participate in a meeting by means of a conference,
telephone or similar communications equipment if all persons participating
in the meeting can hear each other at the same time.
SECTION 11. Compensation of Directors. Directors shall be entitled
to receive such compensation from the Corporation for their services as
may from time to time be voted by the Board of Directors.
SECTION 12. Substitute Member. The members of any committee
present at any meeting, whether or not they constitute a quorum, may
appoint a Director to act in the place of an absent member.
SECTION 13. Mandatory Redemption. The Board of Directors may cause
the redemption of the shares held in any account if the aggregate net
asset value of such shares (taken at cost or value, as determined by the
Board) is less than $500 or such lesser amount as the Board may fix, upon
such notice to the shareholders in question, with such permission to
increase the investment in question and upon such other terms and
conditions as may be fixed by the Board in accordance with the 1940 Act.
SECTION 14. Organizational Expenses. In the event that any person
advances the organizational of the Corporation, such advances shall become
an obligation of the Corporation subject to such terms and conditions as
may be fixed by, and on a date to be fixed by, or determined in accordance
with criteria fixed by the Board, to be amortized over a period or periods
to be fixed by the Board.
ARTICLE III
OFFICERS
SECTION 1. Executive Officers. The executive officers of the
Corporation shall be chosen by the Board of Directors as soon as may be
practicable after the annual meeting of the stockholders. These may
include a Chairman of the Board of Directors and shall include a
President, one or more Vice-Presidents (the number thereof to be
determined by the Board of Directors, a Secretary and a Treasurer. The
President shall be selected from among the Directors. The Board of
Directors or the Executive Committee may also in its discretion appoint
Assistant Secretaries, Assistant Treasurers, and other officers , agents
and employees ,who shall have such authority and perform such duties as
the Board or the Executive Committee may determine. The Board of
Directors may fill any vacancy which may occur in any office. Any two
offices, except those of President and Vice President, may be held by the
same person, but no officer shall execute, acknowledge or verify any
instrument in more than one capacity, if such instrument is required by
law or these By-Laws to be executed, acknowledged or verified by two or
more officers.
SECTION 2. Term of Office. The term of office of all officers
shall be one year and until their respective successors are chosen and
qualified; however, any officer may be removed from office at any time
with or without cause by the vote of a majority of the entire Board of
Directors.
SECTION 3. Powers and Duties. The officers of the Corporation
shall have such powers and duties as generally pertain to their respective
offices, as well as such additional powers and duties as may from time to
time be conferred by the Board of Directors or the Executive Committee.
ARTICLE IV
CAPITAL STOCK
SECTION 1. Certificates of Shares. Each stockholder shall be
entitled to a stock certificate evidencing his interest in the Corporation
in such form as the Board of Directors may from time to time prescribe.
No certificate shall be valid unless it is signed by the Chairman of the
Board of Directors, if any, or the President or a Vice-President and
countersigned by the Secretary or an Assistant Secretary or the Treasurer
or an Assistant Treasurer of the Corporation and sealed with its seal.
The signatures may be either manual or facsimile signatures and the seal
may be either facsimile or any other form of seal. In case any officer
who has signed any certificate ceases to be an officer of the Corporation
before the certificate is issued, the certificate may nevertheless be
issued by the Corporation with the same effect as if the officer had not
ceased to be such officer as of the date of its issue.
SECTION 2. Transfer of Shares. Shares of the Corporation shall be
transferrable on the books of the Corporation by the holder thereof in
person or by his duly authorized attorney or legal representative, upon
surrender and cancellation of certificates, if any, for the same number
of shares of the same class, duly endorsed or accompanied by proper
instruments of assignment and transfer, with such proof of the
authenticity of the signature as the Corporation or its agents may
reasonable require; in the case of shares not represented by certificates;
the same or similar requirements may be imposed by the Board of Directors.
SECTION 3. Stock Ledgers. The stock ledgers of the Corporation,
containing the names and addresses of the stockholders and the number of
shares held by them respectively, shall be kept at the principal office
of the Corporation or, if the Corporation employs a transfer agent, at the
office of the transfer agent of the corporation. The stock ledger may be
in written form or i any other form which can be converted within a
reasonable time into written form for visual inspection.
SECTION 4. Lost, Stolen or Destroyed Certificates. The Board of
Directors or Executive Committee may determine the conditions upon which
a new certificate of stock of the Corporation of any class may be issued
in place of a certificate which is alleged to have been lost, stolen or
destroyed; and may, in their discretion, require the owner of such
certificates or his legal representative to give bond, with sufficient
surety to the Corporation and the transfer agent, if any, to indemnify it
and such Transfer Agent against any and all loss or claims which may arise
by reason of the issue of a new certificate in the place of the one so
lost, stolen or destroyed.
ARTICLE V
CORPORATE SEAL
The Board of Directors shall provide a suitable corporate seal, in
such form and bearing such inscriptions as it may determine.
ARTICLE VI
FISCAL YEAR
The fiscal year of the Corporation shall be fixed from time to time
by the Board of Directors.
ARTICLE VII
The By-Laws of the Corporation may be altered, amended, added to or
repealed by the stockholders or by majority vote of the entire Board of
Directors; but any alteration, amendment, addition or repeal of the By-
Laws by action of the Board of Directors may be altered or repealed by the
stockholders.
LEGAL/LEGAG/225BYL.EXB
OPPENHEIMER QUEST VALUE FUND, INC.
Class A Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER (of shares)
(upper right corner) (share certificate no.) XX-000000
(upper right box, CLASS A SHARES
below cert. no.)
(centered
below boxes) Oppenheimer Quest Value Fund, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 6838OH 109
(at left) is the owner of
(centered) FULLY PAID AND NON-ASSESSABLE CLASS A SHARES OF
CAPITAL STOCK WITH THE PAR VALUE OF $.10 EACH OF
Oppenheimer Quest Value Fund, Inc.
hereinafter called the "Corporation", transferable only on
the books of the Corporation by the holder hereof in
person or by duly authorized attorney, upon surrender of
this certificate properly endorsed. This certificate and
the shares represented hereby are issued and shall be held
subject to all of the provisions of the Articles of
Incorporation of the Corporation to all of which the
holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.
<PAGE>
WITNESS the facsimile seal of Corporation and the
signatures of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ Andrew J. Donohue /s/ Bridget Macaskill
_______________________ ___________________
SECRETARY PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
Oppenheimer Quest Value Fund, Inc.
SEAL
1979
Maryland
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
<PAGE>
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class A Shares of capital
stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer
the said shares on the books of the within named Corporation with full
power of substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Corporation.
The Corporation will furnish to any stockholder, on request and without
charge, a full statement of the designations and any preferences,
conversion and other rights, voting powers, restrictions, limitations as
to dividends, qualifications and terms and conditions of redemption of the
stock of each class which the Corporation is authorized to issue.
<PAGE>
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark: logotype
___________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
OPPENHEIMER QUEST VALUE FUND, INC.
Class B Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER (of shares)
(upper right corner) (share certificate no.) XX-000000
(upper right box, Class B SHARES
below cert. no.)
(centered
below boxes) Oppenheimer Quest Value Fund, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 6838OH 208
(at left) is the owner of
(centered) FULLY PAID AND NON-ASSESSABLE Class B SHARES OF
CAPITAL STOCK WITH THE PAR VALUE OF $.10 EACH OF
Oppenheimer Quest Value Fund, Inc.
hereinafter called the "Corporation", transferable only on
the books of the Corporation by the holder hereof in
person or by duly authorized attorney, upon surrender of
this certificate properly endorsed. This certificate and
the shares represented hereby are issued and shall be held
subject to all of the provisions of the Articles of
Incorporation of the Corporation to all of which the
holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.
<PAGE>
WITNESS the facsimile seal of Corporation and the
signatures of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ Andrew J. Donohue /s/ Bridget Macaskill
_______________________ ___________________
SECRETARY PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
Oppenheimer Quest Value Fund, Inc.
SEAL
1979
Maryland
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
<PAGE>
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class B Shares of capital
stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer
the said shares on the books of the within named Corporation with full
power of substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Corporation.
The Corporation will furnish to any stockholder, on request and without
charge, a full statement of the designations and any preferences,
conversion and other rights, voting powers, restrictions, limitations as
to dividends, qualifications and terms and conditions of redemption of the
stock of each class which the Corporation is authorized to issue.
<PAGE>
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark: logotype
___________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
OPPENHEIMER QUEST VALUE FUND, INC.
Class C Share Certificate (8-1/2" x 11")
I. FACE OF CERTIFICATE (All text and other matter lies within
8-1/4" x 10-3/4" decorative border, 5/16" wide)
(upper left corner, box with heading: NUMBER (of shares)
(upper right corner) (share certificate no.) XX-000000
(upper right box, Class C SHARES
below cert. no.)
(centered
below boxes) Oppenheimer Quest Value Fund, Inc.
INCORPORATED UNDER THE LAWS OF THE STATE OF MARYLAND
(at left) THIS IS TO CERTIFY THAT (at right) SEE REVERSE FOR
CERTAIN DEFINITIONS
(box with number)
CUSIP 6838OH 307
(at left) is the owner of
(centered) FULLY PAID AND NON-ASSESSABLE Class C SHARES OF
CAPITAL STOCK WITH THE PAR VALUE OF $.10 EACH OF
Oppenheimer Quest Value Fund, Inc.
hereinafter called the "Corporation", transferable only on
the books of the Corporation by the holder hereof in
person or by duly authorized attorney, upon surrender of
this certificate properly endorsed. This certificate and
the shares represented hereby are issued and shall be held
subject to all of the provisions of the Articles of
Incorporation of the Corporation to all of which the
holder by acceptance hereof assents. This certificate is
not valid until countersigned by the Transfer Agent.
<PAGE>
WITNESS the facsimile seal of Corporation and the
signatures of its duly authorized officers.
(signature Dated: (signature
at left of seal) at right of seal)
/s/ Andrew J. Donohue /s/ Bridget Macaskill
_______________________ ___________________
SECRETARY PRESIDENT
(centered at bottom)
1-1/2" diameter facsimile seal
with legend
Oppenheimer Quest Value Fund, Inc.
SEAL
1979
Maryland
(at lower right, printed
vertically) Countersigned
OPPENHEIMERFUNDS SHAREHOLDER SERVICES
(A DIVISION OF OPPENHEIMERFUNDS, INC.)
Denver (CO) Transfer Agent
By ____________________________
Authorized Signature
II. BACK OF CERTIFICATE (text reads from top to bottom of 11"
dimension)
The following abbreviations, when used in the inscription on the face
of this certificate, shall be construed as though they were written out
in full according to applicable laws or regulations.
TEN COM - as tenants in common
TEN ENT - as tenants by the entirety
JT TEN WROS NOT TC - as joint tenants with
rights of survivorship and not
as tenants in common
UNIF GIFT/TRANSFER MIN ACT - __________________ Custodian _______________
(Cust) (Minor)
UNDER UGMA/UTMA ___________________
(State)
Additional abbreviations may also be used though not in the above list.
For Value Received ................ hereby sell(s), assign(s), and
transfer(s) unto
<PAGE>
PLEASE INSERT SOCIAL SECURITY OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
AND PROVIDE CERTIFICATION BY TRANSFEREE
(box for identifying number)
_______________________________________________________________________
(Please print or type name and address of assignee)
______________________________________________________
________________________________________________Class C Shares of capital
stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint ___________________________ Attorney to transfer
the said shares on the books of the within named Corporation with full
power of substitution in the premises.
Dated: ______________________
Signed: __________________________
___________________________________
(Both must sign if joint owners)
Signature(s) __________________________
guaranteed Name of Guarantor
by: _____________________________
Signature of
Officer/Title
(text printed NOTICE: The signature(s) to this assignment must
vertically to right correspond with the name(s) as written upon the
of above paragraph) face of the certificate in every particular
without alteration or enlargement or any change
whatever.
(text printed in Signatures must be guaranteed by a financial
box to left of institution of the type described in the current
signature(s)) prospectus of the Corporation.
The Corporation will furnish to any stockholder, on request and without
charge, a full statement of the designations and any preferences,
conversion and other rights, voting powers, restrictions, limitations as
to dividends, qualifications and terms and conditions of redemption of the
stock of each class which the Corporation is authorized to issue.
<PAGE>
PLEASE NOTE: This document contains a watermark OppenheimerFunds
when viewed at an angle. It is invalid without this "four hands"
watermark: logotype
___________________________________________________
THIS SPACE MUST NOT BE COVERED IN ANY WAY
INVESTMENT ADVISORY AGREEMENT
AGREEMENT, made the 22nd day of November, 1995, by and between
OPPENHEIMER QUEST VALUE FUND, INC., a Maryland corporation
(hereinafter referred to as the "Company"), and OPPENHEIMER MANAGEMENT
CORPORATION (hereinafter referred to as "OMC").
WHEREAS, the Company is an open-end, diversified management
investment company registered as such with the Securities and Exchange
Commission (the "Commission") pursuant to the Investment Company Act of
1940 (the "Investment Company Act"), and OMC is an investment adviser
registered as such with the Commission under the Investment Advisers
Act of 1940;
WHEREAS, the Company desires that OMC shall act as its investment
adviser pursuant to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and
covenants hereinafter set forth, it is agreed by and between the
parties, as follows:
1. General Provisions:
The Company hereby employs OMC and OMC hereby undertakes to
act as the investment adviser of the Company, and to perform for the
Company such other duties and functions for the period and on such
terms as set forth in this Agreement. OMC shall, in all matters, give
to the Company and its Board of Directors (the "Directors") the benefit
of its best judgement, effort, advice and recommendations and shall, at
all times conform to, and use its best efforts to enable the Company to
conform to (i) the provisions of the Investment Company Act and any
rules or regulations thereunder; (ii) any other applicable provisions
of state or Federal law; (iii) the provisions of the Certificate of
Incorporation and By-Laws of the Company as amended from time to time;
(iv) policies and determinations of the Directors; (v) the fundamental
policies and investment restrictions as reflected in the registration
statement of the Company under the Investment Company Act or as such
policies may, from time to time, be amended and (vi) the Prospectus and
Statement of Additional Information in effect from time to time. The
appropriate officers and employees of OMC shall be available upon
reasonable notice for consultation with any of the Directors and
officers of the Company with respect to any matters dealing with the
business and affairs of the Company including the valuation of
portfolio securities of the Company which are either not registered for
public sale or not traded on any securities market.
2. Investment Management:
(a) OMC shall, subject to the direction and control by the
Directors, (i) regularly provide investment advise and recommendations
to the Company with respect to the investments, investment policies and
the purchase and sale of securities; (ii) supervise continuously the
investment program of the Company and the composition of its portfolio
and determine what securities shall be purchased or sold by; and(iii)
arrange, subject to the provisions of paragraph 7 hereof, for the
purchase of securities of the Company and the sale of securities and
other investments held in the portfolio.
(b) Provided that the Company shall not be required to pay
any compensation for services under this Agreement other than as
provided by the terms of the Agreement and subject to the provisions of
paragraph 7 hereof, OMC may obtain investment information, research or
assistance from any other person, firm or corporation to supplement,
update or otherwise improve its investment management services
including entering into sub-advisory agreements with other affiliated
or unaffiliated registered investment advisors to obtain specialized
services.
(c) Provided that nothing herein shall be deemed to protect
OMC from willful misfeasance, bad faith or gross negligence in the
performance of its duties, or reckless disregard of its obligations and
duties under this Agreement, OMC shall not be liable for any loss
sustained by reason of good faith errors or omissions in connection
with any matters to which this Agreement relates.
(d) Nothing in this Agreement shall prevent OMC or any
entity controlling, controlled by or under common control with OMC or
any officer thereof from acting as investment adviser for any other
person, firm or corporation or in any way limit or restrict OMC or any
of its directors, officers, stockholders or employees from buying,
selling or trading any securities for its or their own account or for
the account of others for whom it or they may be acting, provided that
such activities will not adversely affect or otherwise impair the
performance by OMC of its duties and obligations under this Agreement.
3. Other Duties of OMC:
OMC shall, at its own expense, provide and supervise the
activities of all administrative and clerical personnel as shall be
required to provide effective corporate administration for the Company,
including the compilation and maintenance of such records with respect
to its operations as may reasonably be required; the preparation and
filing of such reports with respect thereto as shall be required by the
Commission; composition of periodic reports with respect to operations
of the Company for its shareholders; composition of proxy materials for
meetings of the Company's shareholders; and the composition of such
registration statements as may be required by Federal and state
securities laws for continuous public sale of Shares of the Company.
OMC shall, at its own cost and expense, also provide the Company with
adequate office space, facilities and equipment. OMC shall, at its own
expenses, provide such officers for the Company as the Board of
Directors may request.
4. Allocation of Expenses:
All other costs and expenses (of the Company) not expressly
assumed by OMC under this Agreement, or to be paid by the Distributor
of the Shares of the Company, shall be paid by the Company, including,
but not limited to: (i) interest, taxes and governmental fees; (ii)
brokerage commissions and other expenses incurred in acquiring or
disposing of the portfolio securities and other investments; (iii)
insurance premiums for fidelity and other coverage requisite to its
operations; (iv) compensation and expenses of its Directors other than
those affiliated with OMC; (v) legal and audit expenses; (vi) custodian
and transfer agent fees and expenses; (vii) expenses incident to the
redemption of its Shares; (viii) expenses incident to the issuance of
its Shares against payment therefor by or on behalf of the subscribers
thereto; (ix) fees and expenses, other than as hereinabove provided,
incident to the registration under Federal and state securities laws of
Shares of the Company for public sale; (x) expenses of printing and
mailing reports, notices and proxy materials to shareholders of the
Company; (xi) except as noted above, all other expenses incidental to
holding meetings of the Company's shareholders; and (xii) such
extraordinary non-recurring expenses as may arise, including
litigation, affecting the Company thereof and any legal obligation
which the Company, may have to indemnify its officers and Directors
with respect thereto. Any officers or employees of OMC or any entity
controlling, controlled by, or under common control with OMC who also
serve as officers, Directors or employees of the Company shall not
receive any compensation from the Company thereof for their services.
5. Compensation of OMC:
The Company agrees to pay OMC and OMC agrees to accept as
full compensation for the performance of all functions and duties on
its part to be performed pursuant to the provisions hereof, a fee
computed on the total net asset value of the Company as of the close of
each business day and payable monthly at the annual rate set forth on
Schedule A hereto.
6. Use of Name "Oppenheimer" or "Quest For Value":
OMC hereby grants to the Company a royalty-free, non-
exclusive license to use the name "Oppenheimer" or "Quest For Value" in
the name of the Company for the duration of this Agreement and any
extensions or renewals thereof. To the extent necessary to protect
OMC's rights to the name "Oppenheimer" or "Quest For Value" under
applicable law, such license shall allow OMC to inspect, subject to
control by the Company's Board, control the nature and quality of
services offered by the Company under such name and may, upon
termination of this Agreement, be terminated by OMC, in which event the
Company shall promptly take whatever action may be necessary to change
its name and discontinue any further use of the name "Oppenheimer" or
"Quest For Value" in the name of the Company or otherwise. The name
"Oppenheimer" and "Quest For Value" may be used or licensed by OMC in
connection with any of its activities, or licensed by OMC to any other
party.
7. Portfolio Transactions and Brokerage:
(a) OMC (and any Sub Advisor) is authorized, in arranging
the purchase and sale of the portfolio securities of the Company to
employ or deal with such members of securities or commodities
exchanges, brokers or dealers (hereinafter "broker-dealers"), including
"affiliated" broker-dealers (as that term is defined in the Investment
Company Act), as may, in its best judgment, implement the policy of the
Fund to obtain, at reasonable expense, the "best execution" (prompt and
reliable execution at the most favorable security price obtainable) of
the portfolio transactions of the Company as well as to obtain,
consistent with the provisions of subparagraph (c) of this paragraph 7,
the benefit of such investment information or research as will be of
significant assistance to the performance by OMC of its investment
management functions.
(b) OMC (and any Sub Advisor) shall select broker-dealers to
effect the portfolio transactions of the Company on the basis of its
estimate of their ability to obtain best execution of particular and
related portfolio transactions. The abilities of a broker-dealer to
obtain best execution of particular portfolio transaction(s) will be
judged by OMC (or any Sub Advisor) on the basis of all relevant factors
and considerations including, insofar as feasible, the execution
capabilities required by the transaction or transactions; the ability
and willingness of the broker-dealer to facilitate the portfolio
transactions of the Company by participating therein for its own
account; the importance to the Company of speed, efficiency or
confidentiality; the broker-dealer's apparent familiarity with sources
from or to whom particular securities might be purchased or sold; as
well as any other matters relevant to the selection of a broker-dealer
for particular and related transactions of the Company.
(c) OMC (and any Sub Advisor) shall have discretion, in the
interest of the Company, to allocate brokerage on the portfolio
transactions of the Company to broker-dealers, other than an affiliated
broker-dealers, qualified to obtain best execution of such transactions
who provide brokerage and/or research services (as such services are
defined in Section 28(e)(3) of the Securities Exchange Act of 1934) for
the Company and/or other accounts for which OMC or its affiliates (or
any Sub Advisor) exercise "investment discretion" (as that term is
defined in Section 3(a)(35) of the Securities Exchange Act of 1934) and
to cause the Company to pay such broker-dealers a commission for
effecting a portfolio transaction for the Company that is in excess of
the amount of commission another broker-dealer adequately qualified to
effect such transaction would have charged for effecting that
transaction, if OMC (or any Sub Advisor) determines, in good faith,
that such commission is reasonable in relation to the value of the
brokerage and/or research services provided by such broker-dealer
viewed in terms of either that particular transaction or the overall
responsibilities of OMC or its affiliates (or any Sub Advisor) with
respect to accounts as to which they exercise investment discretion. In
reaching such determination, OMC (or any Sub Advisor) will not be
required to place or attempt to place a specific dollar value on the
brokerage and/or research services provided or being provided by such
broker-dealer. In demonstrating that such determinations were made in
good faith, OMC (and any Sub Advisor) shall be prepared to show that
all commissions were allocated for purposes contemplated by this
Agreement and that the total commissions paid by the Company over a
representative period selected by the Company's Directors were
reasonable in relation to the benefits to the Company.
(d) OMC (or any Sub Advisor) shall have no duty or
obligation to seek advance competitive bidding for the most favorable
commission rate applicable to any particular portfolio transactions or
to select any broker-dealer on the basis of its purported or "posted"
commission rate but will, to the best of its ability, endeavor to be
aware of the current level of the charges of eligible broker-dealers
and to minimize the expense incurred by the Company for effecting its
portfolio transactions to the extent consistent with the interests and
policies of the Company as established by the determinations of the
Board of Directors of the Company and the provisions of this paragraph
7.
(e) The Company recognizes that an affiliated broker-dealer:
(i) may act as one of the Company's regular brokers for the Company or
a Series thereof so long as it is lawful for it so to act; (ii) may be
a major recipient of brokerage commissions paid by the Company; and
(iii) may effect portfolio transactions for the Company or a Series
thereof only if the commissions, fees or other renumeration received or
to be received by it are determined in accordance with procedures
contemplated by any rule, regulation or order adopted under the
Investment Company Act for determining the permissible level of such
commissions.
(f) Subject to the foregoing provisions of this paragraph 7,
OMC (and any Sub Advisor) may also consider sales of Shares of the
Company, and the other funds advised by OMC and its affiliates as a
factor in the selection of broker-dealers for its portfolio
transactions.
8. Duration:
This Agreement will take effect on the date first set forth
above. Unless earlier terminated pursuant to paragraph 10 hereof, this
Agreement shall remain in effect from year-to-year, so long as such
continuance shall be approved at least annually by the Company's Board
of Directors, including the vote of the majority of the Directors of
the Company who are not parties to this Agreement or "interested
persons" (as defined in the Investment Company Act) of any such party,
cast in person at a meeting called for the purpose of voting on such
approval, or by the holders of a "majority" (as defined in the
Investment Company Act) of the outstanding voting securities of the
Company, and by such a vote of the Company's Board of Directors.
<PAGE>
9. Termination.
This Agreement may be terminated (i) by OMC at any time
without penalty upon sixty days' written notice to the Company (which
notice may be waived by the Company); or (ii) by the Company at any
time without penalty upon sixty days' written notice to OMC (which
notice may be waived by OMC) provided that such termination by the
Company shall be directed or approved by the vote of a majority of all
of the Directors of the Company then in office or by the vote of the
holders of a "majority" of the outstanding voting securities of the
Company (as defined in the Investment Company Act).
10. Assignment or Amendment:
This Agreement may not be amended, or the rights of OMC
hereunder sold, transferred, pledged or otherwise in any manner
encumbered without the affirmative vote or written consent of the
holders of the "majority" of the outstanding voting securities of the
Company. This Agreement shall automatically and immediately terminate
in the event of its "assignment," as defined in the Investment Company
Act.
11. Definitions:
The terms and provisions of the Agreement shall be
interpreted and defined in a manner consistent with the provisions and
definitions contained in the Investment Company Act.
OPPENHEIMER QUEST VALUE FUND, INC.
Attest: ______________________ By: _______________________
Title: _______________________
OPPENHEIMER MANAGEMENT
CORPORATION
Attest: ______________________ By: _______________________
Katherine P. Feld Andrew J. Donohue
Secretary Executive Vice President
Schedule A To
Investment Advisory Agreement
Between Oppenheimer Quest Value Fund, Inc.
and
Oppenheimer Management Corporation
Name of Series Annual Fee as a Percentage of Daily Total
Net Assets
Oppenheimer Quest
Value Fund, Inc. 1.00% of first $400 million of all net
assets
0.90% of next $400 million of all net
assets
0.85% of net assets over $800 million
don/investad.ag3
SUBADVISORY AGREEMENT
THIS AGREEMENT is made by and between Oppenheimer Management
Corporation, a Colorado corporation (the "Adviser"), and OpCap
Advisors, a Delaware general partnership (the "Subadviser"), as of the
date set forth below.
RECITAL
WHEREAS, Oppenheimer Quest Value Fund, Inc. (the "Fund") is
registered under the Investment Company Act of 1940, as amended (the
"1940 Act"), as an open-end, diversified management investment company;
WHEREAS, the Adviser is registered under the Investment Advisers
Act of 1940, as amended (the "Advisers Act"), as an investment adviser
and engages in the business of acting as an investment adviser;
WHEREAS, the Subadviser is registered under the Advisers Act as an
investment adviser and engages in the business of acting as an
investment adviser;
WHEREAS, the Adviser has entered into an Investment Advisory
Agreement as of the date hereof with the Fund (the "Investment Advisory
Agreement"), pursuant to which the Adviser shall act as investment
adviser with respect to the Fund; and
WHEREAS, pursuant to Paragraph 2 of the Investment Advisory
Agreement, the Adviser wishes to retain the Subadviser for purposes of
rendering investment advisory services to the Adviser in connection
with the Fund upon the terms and conditions hereinafter set forth;
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt of
which are hereby acknowledged, the parties hereto agree as follows:
I. Appointment and Obligations of the Adviser.
The Adviser hereby appoints the Subadviser to render, to the
Adviser with respect to the Fund, investment research and advisory
services as set forth below in Section II, under the supervision of the
Adviser and subject to the approval and direction of the Fund's Board
of Directors (the "Board"), and the Subadviser hereby accepts such
appointment, all subject to the terms and conditions contained herein.
The Subadviser shall, for all purposes herein, be deemed an independent
contractor and shall not have, unless otherwise expressly provided or
authorized, any authority to act for or represent the Fund in any way
or otherwise to serve as or be deemed an agent of the Fund.
<PAGE>
II. Duties of the Subadviser and the Adviser.
A. Duties of the Subadviser.
The Subadviser shall regularly provide investment advice with
respect to the Fund and shall, subject to the terms of this Agreement,
continuously supervise the investment and reinvestment of cash,
securities and instruments or other property comprising the assets of
the Fund, and in furtherance thereof, the Subadviser's duties shall
include:
1. Obtaining and evaluating pertinent information about
significant developments and economic, statistical and financial
data, domestic, foreign or otherwise, whether affecting the
economy generally or the Fund, and whether concerning the
individual issuers whose securities are included in the Fund or
the activities in which such issuers engage, or with respect to
securities which the Subadviser considers desirable for inclusion
in the Fund's investment portfolio;
2. Determining which securities shall be purchased, sold or
exchanged by the Fund or otherwise represented in the Fund's
investment portfolio and regularly reporting thereon to the
Adviser and, at the request of the Adviser, to the Board;
3. Formulating and implementing continuing programs for the
purchases and sales of the securities of such issuers and
regularly reporting thereon to the Adviser and, at the request of
the Adviser, to the Board; and
4. Taking, on behalf of the Fund, all actions that appear to the
Subadviser necessary to carry into effect such investment program,
including the placing of purchase and sale orders, and making
appropriate reports thereon to the Adviser and the Board.
B. Duties of the Adviser.
The Adviser shall retain responsibility for, among other things,
providing the following advice and services with respect to the Fund:
1. Without limiting the obligation of the Subadviser to so
comply, the Adviser shall monitor the investment program
maintained by the Subadviser for the Fund to ensure that the
Fund's assets are invested in compliance with this Agreement
and the Fund's Registration Statement, as currently in effect
from time to time; and
2. The Adviser shall oversee matters relating to Fund promotion,
including, but not limited to, marketing materials and the
Subadviser's reports to the Board.
III. Representations, Warranties and Covenants.
A. Representations, Warranties and Covenants of the Subadviser.
1. Organization. The Subadviser is now, and will continue to
be, a general partnership duly formed and validly existing under
the laws of its jurisdiction of formation, fully authorized to
enter into this Agreement and carry out its duties and obligations
hereunder.
2. Registration. The Subadviser is registered as an investment
adviser with the Securities and Exchange Commission (the "SEC")
under the Advisers Act, and is registered or licensed as an
investment adviser under the laws of all jurisdictions in which
its activities require it to be so registered or licensed, except
where the failure to be so licensed would not have a material
adverse effect on the Subadviser. The Subadviser shall maintain
such registration or license in effect at all times during the
term of this Agreement.
3. Best Efforts. The Subadviser at all times shall provide its
best judgment and effort to the Adviser and the Fund in carrying
out its obligations hereunder.
4. Other Covenants. The Subadviser further agrees that:
a. it will use the same skill and care in providing such
services as it uses in providing services to other accounts
for which it has investment management responsibilities;
b. it will not make loans to any person to purchase or carry
shares of the Fund or make loans to the Fund;
c. it will report regularly to the Fund and to the Adviser and
will make appropriate persons available for the purpose of
reviewing with representatives of the Adviser on a regular
basis the management of the Fund, including, without
limitation, review of the general investment strategy of the
Fund, economic considerations and general conditions
affecting the marketplace;
d. as required by applicable laws and regulations, it will
maintain books and records with respect to the Fund's
securities transactions and it will furnish to the Adviser
and to the Board such periodic and special reports as the
Adviser or the Board may reasonably request;
e. it will treat confidentially and as proprietary information
of the Fund all records and other information relative to the
Fund, and will not use records and information for any
purpose other than performance of its responsibilities and
duties hereunder, except after prior notification to and
approval in writing by the Fund or when so requested by the
Fund or required by law or regulation;
f. it will, on a continuing basis and at its own expense, (1)
provide the distributor of the Fund (the "Distributor") with
assistance in the distribution and marketing of the Fund in
such amount and form as the Adviser may reasonably request
from time to time, and (2) use its best efforts to cause the
portfolio manager or other person who manages or is
responsible for overseeing the management of the Fund's
portfolio (the "Portfolio Manager") to provide marketing and
distribution assistance to the Distributor, including,
without limitation, conference calls, meetings and road
trips, provided that each Portfolio Manager shall not be
required to devote more than 10% of his or her time to such
marketing and distribution activities;
g. it will use its reasonable best efforts (i) to retain
the services of the Portfolio Manager who manages the
portfolio of the Fund, from time to time and (ii) to
promptly obtain the services of a Portfolio Manager
acceptable to the Adviser if the services of the
Portfolio Manager are no longer available to the
Subadviser;
h. it will, from time to time, assure that each Portfolio
Manager is acceptable to the Adviser;
i. it will obtain the written approval of the Adviser prior
to designating a new Portfolio Manager; provided,
however, that, if the services of a Portfolio Manager
are no longer available to the Subadviser due to
circumstances beyond the reasonable control of the
Subadviser (e.g., voluntary resignation, death or
disability), the Subadviser may designate an interim
Portfolio Manager who (a) shall be reasonably acceptable
to the Adviser and (b) shall function for a reasonable
period of time until the Subadviser designates an
acceptable permanent replacement; and
j. it will promptly notify the Adviser of any impending
change in Portfolio Manager, portfolio management or any
other material matter that may require disclosure to the
Board, shareholders of the Fund or dealers.
B. Representations, Warranties and Covenants of the Adviser.
1. Organization. The Adviser is now, and will continue to
be, duly organized and in good standing under the laws of its
state of incorporation, fully authorized to enter into this
Agreement and carry out its duties and obligations hereunder.
2. Registration. The Adviser is registered as an
investment adviser with the SEC under the Advisers Act, and
is registered or licensed as an investment adviser under the
laws of all jurisdictions in which its activities require it
to be so registered or licensed. The Adviser shall maintain
such registration or license in effect at all times during
the term of this Agreement.
3.Best Efforts. The Adviser at all times shall provide its
best judgment and effort to the Fund in carrying out its
obligations hereunder. For a period of five years from the
date hereof, and subject to the Adviser's fiduciary
obligations to the Fund and its shareholders, the Adviser
will not recommend to the Board that the Fund be reorganized
into another Fund unless the total net assets of the Fund are
less than $100 million at the time of such reorganization.
IV. Compliance with Applicable Requirements.
In carrying out its obligations under this Agreement, the
Subadviser shall at all times conform to:
A. all applicable provisions of the 1940 Act and any rules and
regulations adopted thereunder;
B. the provisions of the registration statement of the Fund, as
the same may be amended from time to time, under the
Securities Act of 1933, as amended, and the 1940 Act;
C. the provisions of the Fund's Certificate of Incorporation or
other governing document, as amended from time to time;
D. the provisions of the By-laws of the Fund, as amended from
time to time;
E. any other applicable provisions of state or federal law; and
F. guidelines, investment restrictions, policies, procedures or
instructions adopted or issued by the Fund or the Adviser
from time to time.
The Adviser shall promptly notify the Subadviser of any changes or
amendments to the provisions of B., C., D. and F. above when such
changes or amendments relate to the obligations of the Subadviser.
V. Control by the Board.
Any investment program undertaken by the Subadviser pursuant to
this Agreement, as well as any other activities undertaken by the
Subadviser with respect to the Fund, shall at all times be subject to
any directives of the Adviser and the Board.
VI. Books and Records.
The Subadviser agrees that all records which it maintains for the
Fund on behalf of the Adviser are the property of the Fund and further
agrees to surrender promptly to the Fund or to the Adviser any of such
records upon request. The Subadviser further agrees to preserve for
the periods prescribed by applicable laws, rules and regulations all
records required to be maintained by the Subadviser on behalf of the
Adviser under such applicable laws, rules and regulations, or such
longer period as the Adviser may reasonably request from time to time.
VII. Broker-Dealer Relationships.
A. Portfolio Trades.
The Subadviser, at its own expense, and to the extent
appropriate, in consultation with the Adviser, shall place all orders
for the purchase and sale of portfolio securities for the Fund with
brokers or dealers selected by the Subadviser, which may include, to
the extent permitted by the Adviser and the Fund, brokers or dealers
affiliated with the Subadviser. The Subadviser shall use its best
efforts to seek to execute portfolio transactions at prices that are
advantageous to the Fund and at commission rates that are reasonable in
relation to the benefits received.
B. Selection of Broker-Dealers.
With respect to the execution of particular transactions, the
Subadviser may, to the extent permitted by the Adviser and the Fund,
select brokers or dealers who also provide brokerage and research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended) to the Fund and/or the other
accounts over which the Subadviser or its affiliates exercise
investment discretion. The Subadviser is authorized to pay a broker or
dealer who provides such brokerage and research services a commission
for executing a portfolio transaction for the Fund that is in excess of
the amount of commission another broker or dealer would have charged
for effecting that transaction if the Subadviser determines in good
faith that such amount of commission is reasonable in relation to the
value of the brokerage and research services provided by such broker or
dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities that the
Subadviser and its affiliates have with respect to accounts over which
they exercise investment discretion. The Adviser, Subadviser and the
Board shall periodically review the commissions paid by the Fund to
determine, among other things, if the commissions paid over
representative periods of time were reasonable in relation to the
benefits received.
C. Soft Dollar Arrangements.
The Subadviser may enter into "soft dollar" arrangements through
the agency of third parties on behalf of the Adviser. Soft dollar
arrangements for services may be entered into in order to facilitate an
improvement in performance in respect of the Subadviser's service to
the Adviser with respect to the Fund. The Subadviser makes no direct
payments but instead undertakes to place business with broker-dealers
who in turn pay third parties who provide these services. Soft dollar
transactions will be conducted on an arm's-length basis, and the
Subadviser will secure best execution for the Adviser. Any
arrangements involving soft dollars and/or brokerage services shall be
effected in compliance with Section 28(e) of the Securities Exchange
Act of 1934, as amended, and the policies that the Adviser and the
Board may adopt from time to time. The Subadviser agrees to provide
reports to the Adviser as necessary for purposes of providing
information on these arrangements to the Board.
VIII. Compensation.
A. Amount of Compensation. The Adviser shall pay the
Subadviser, as compensation for services rendered hereunder,
from its own assets, an annual fee, payable monthly, equal to
40% of the investment advisory fee collected by the Adviser
from the Fund, based on the total net assets of the Fund
existing as of the date hereof (the "base amount"), plus 30%
of the advisory fee collected by the Adviser, based on the
total net assets of the Fund that exceed the base amount (the
"marginal amount"), in each case calculated after any
waivers, voluntary or otherwise.
B. Calculation of Compensation. Except as hereinafter set
forth, compensation under this Agreement shall be calculated
and accrued on the same basis as the advisory fee paid to the
Adviser by the Fund. If this Agreement becomes effective
subsequent to the first day of a month or shall terminate
before the last day of a month, compensation for that part of
the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees set forth
above.
C. Payment of Compensation: Subject to the provisions of this
paragraph, payment of the Subadviser's compensation for the
preceding month shall be made within 15 days after the end of
the preceding month.
D. Reorganization of the Fund. If the Fund is reorganized with
another investment company for which the Subadviser does not
serve as an investment adviser or subadviser, and the Fund is
the surviving entity, the subadvisory fee payable under this
section shall be adjusted in an appropriate manner as the
parties may agree.
IX. Allocation of Expenses.
The Subadviser shall pay the expenses incurred in providing
services in connection with this Agreement, including, but not limited
to, the salaries, employment benefits and other related costs of those
of its personnel engaged in providing investment advice to the Fund
hereunder, including, without limitation, office space, office
equipment, telephone and postage costs and other expenses. In the
event of an "assignment" of this Agreement, other than an assignment
resulting solely by action of the Adviser or an affiliate thereof, the
Subadviser shall be responsible for payment of all costs and expenses
incurred by the Adviser and the Fund relating thereto, including, but
not limited to, reasonable legal, accounting, printing and mailing
costs related to obtaining approval of Fund shareholders.
X. Non-Exclusivity.
The services of the Subadviser with respect to the Fund are not to
be deemed to be exclusive, and the Subadviser shall be free to render
investment advisory and administrative or other services to others
(including other investment companies) and to engage in other
activities, subject to the provisions of a certain Agreement Not to
Compete dated as of November 22, 1995 among the Adviser, Oppenheimer
Capital, the Subadviser and Quest For Value Distributors (the
"Agreement Not to Compete"). It is understood and agreed that officers
or directors of the Subadviser may serve as officers or directors of
the Adviser or of the Fund; that officers or directors of the Adviser
or of the Fund may serve as officers or directors of the Subadviser to
the extent permitted by law; and that the officers and directors of the
Subadviser are not prohibited from engaging in any other business
activity or from rendering services to any other person, or from
serving as partners, officers, directors or trustees of any other firm
or trust, including other investment advisory companies (subject to the
provisions of the Agreement Not to Compete), provided it is permitted
by applicable law and does not adversely affect the Fund.
XI. Term.
This Agreement shall become effective at the close of business on
the date hereof and shall remain in force and effect, subject to
Paragraphs XII.A and XII.B hereof and approval by the Fund's
shareholders, for a period of two years from the date hereof.
XII. Renewal.
Following the expiration of its initial two-year term, the
Agreement shall continue in full force and effect from year to year
for a period of eight years, provided that such continuance is
specifically approved:
A. at least annually (1) by the Board or by the vote of a
majority of the Fund's outstanding voting securities (as
defined in Section 2(a)(42) of the 1940 Act), and (2) by the
affirmative vote of a majority of the directors who are not
parties to this Agreement or interested persons of a party to
this Agreement (other than as a director of the Fund), by
votes cast in person at a meeting specifically called for
such purpose; or
B. by such method required by applicable law, rule or regulation
then in effect.
XIII. Termination.
A. Termination by the Fund. This Agreement may be terminated at
any time, without the payment of any penalty, by vote of the
Board or by vote of a majority of the Fund's outstanding
voting securities, on sixty (60) days' written notice. The
notice provided for herein may be waived by the party
required to be notified.
B. Assignment. This Agreement shall automatically terminate in
the event of its "assignment," as defined in Section 2 (a)
(4) of the 1940 Act. In the event of an assignment that
occurs solely due to the change in control of the Subadviser
(provided that no condition exists that permits, or, upon the
consummation of the assignment, will permit, the termination
of this Agreement by the Adviser pursuant to Section XIII. D.
hereof), the Adviser and the Subadviser, at the sole expense
of the Subadviser, shall use their reasonable best efforts to
obtain shareholder approval of a successor Subadvisory
Agreement on substantially the same terms as contained in
this Agreement.
C. Payment of Fees After Termination. Notwithstanding the
termination of this Agreement prior to the tenth anniversary
of the date hereof, the Adviser shall continue to pay to the
Subadviser the subadvisory fee for the term of this Agreement
and any renewals thereof through such tenth anniversary, if:
(1) the Adviser or the Fund terminates this Agreement for a
reason other than the reasons set forth in Section XIII.D.
hereof, provided the Investment Advisory Agreement remains in
effect; (2) the Fund reorganizes with another investment
company advised by the Adviser (or an affiliate of the
Adviser) and for which the Subadviser does not serve as an
investment adviser or subadviser and such other investment
company is the surviving entity; or (3) the Investment
Advisory Agreement terminates (i) by reason of an
"assignment;" (ii) because the Adviser is disqualified from
serving as an investment adviser; or (iii) by reason of a
voluntary termination by the Adviser; provided that the
Subadviser does not serve as the investment adviser or
subadviser of the Fund after such termination of the
Investment Advisory Agreement. The amount of the subadvisory
fee paid pursuant to this section shall be calculated on the
basis of the Fund's net assets measured at the time of such
termination or such reorganization. Notwithstanding anything
to the contrary, if the Subadviser terminates this Agreement
or if this Agreement is terminated by operation of law, due
solely to an act or omission by the Subadviser, Oppenheimer
Capital ("OpCap") or their respective partners, subsidiaries,
directors, officers, employees or agents (other than by
reason of an "assignment"of this Agreement), then the Adviser
shall not be liable for any further payments under this
Agreement, provided, however, that if at any time prior to
the end of the term of the Agreement Not to Compete any event
that would have permitted the termination of this Agreement
by the Adviser pursuant to Section XIII. D. (3) hereof
occurs, the Adviser shall be under no further obligation to
pay any subadvisory fees.
D. Termination by the Adviser. The Adviser may terminate this
Agreement without penalty and without the payment of any fee
or penalty, immediately after giving written notice, upon the
occurrence of any of the following events:
1. The Fund's investment performance of the Fund's Class A
shares compared to the appropriate universe of Class A
shares (or their equivalent), as set forth on Schedule
D-1, as amended from time to time, ranks in the bottom
quartile for two consecutive calendar years (beginning
with the calendar year 1995) and earns a Morningstar
three-year rating of less than three (3) stars at the
time of such termination; or
2. Any of the Subadviser, OpCap, their respective partners,
subsidiaries, affiliates, directors, officers, employees
or agents engages in an action or omits to take an
action that would cause the Subadviser or OpCap to be
disqualified in any manner under Section 9(a) of the
1940 Act, if the SEC were not to grant an exemptive
order under Section 9(c) thereof or that would
constitute grounds for the SEC to deny, revoke or
suspend the registration of the Subadviser as an
investment adviser with the SEC;
3. Any of OpCap, the Subadviser, their respective partners,
subsidiaries, affiliates, directors, officers, employees
or agents causes a material violation of the Agreement
Not to Compete which is not cured in accordance with the
provisions of that agreement; or
4. The Subadviser breaches the representations contained in
Paragraph III.A.4.i. of this Agreement or any other
material provision of this Agreement, and any such
breach is not cured within a reasonable period of time
after notice thereof from the Adviser to the Subadviser.
However, consistent with its fiduciary obligations, for
a period of seven months the Adviser will not terminate
this Agreement solely because the Subadviser has failed
to designate an acceptable permanent replacement to a
Portfolio Manager whose services are no longer available
to the Subadviser due to circumstances beyond the
reasonable control of the Subadviser, provided that the
Subadviser uses its reasonable best efforts to promptly
obtain the services of a Portfolio Manager acceptable to
the Adviser and further provided that the Adviser has
not unreasonably withheld approval of such replacement
Portfolio Manager.
E. Transactions in Progress upon Termination. The Adviser and
Subadviser will cooperate with each other to ensure that
portfolio or other transactions in progress at the date of
termination of this Agreement shall be completed by the
Adviser in accordance with the terms of such transactions,
and to this end the Subadviser shall provide the Adviser with
all necessary information and documentation to secure the
implementation thereof.
XIV. Non-Solicitation.
During the term of this Agreement, the Adviser (and its affiliates
under its control) shall not solicit or knowingly assist in the
solicitation of any Portfolio Manager of the Fund or any portfolio
assistant of the Fund then employed by the Subadviser or OpCap,
provided, however, that the Adviser (or its affiliates) may solicit or
hire any such individual who (A) the Subadviser or OpCap (or its
affiliates) has terminated or (B) has voluntarily terminated his or her
employment with the Subadviser, OpCap (or its affiliates) without
inducement of the Adviser (or its affiliates under its control) prior
to the time of such solicitation. Advertising in general circulation
newspapers or industry newsletters by the Adviser shall not constitute
"inducement" by the Adviser (or its affiliates under its control).
XV. Liability of the Subadviser.
In the absence of willful misfeasance, bad faith, negligence or
reckless disregard of obligations or duties hereunder on the part of
the Subadviser or any of its officers, directors or employees, the
Subadviser shall not be subject to liability to the Adviser for any act
or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security; provided, however, that the foregoing
shall not be construed to relieve the Subadviser of any liability it
may have arising under the Agreement Not to Compete or the Acquisition
Agreement dated August 15, 1995, among the Subadviser, the Adviser and
certain affiliates of the Subadviser.
XVI. Notices.
Any notice or other communication required or that may be given
hereunder shall be in writing and shall be delivered personally,
telecopied, sent by certified, registered or express mail, postage
prepaid or sent by national next-day delivery service and shall be
deemed given when so delivered personally or telecopied, or if mailed,
two days after the date of mailing, or if by next-day delivery service,
on the business day following delivery thereto, as follows or to such
other location as any party notifies any other party:
A. if to the Adviser, to:
Oppenheimer Management Corporation
Two World Trade Center
New York, New York 10048-0203
Attention: Andrew J. Donohue
Executive Vice President and General Counsel
Telecopier: 212-321-1159
B. if to the Subadviser, to:
Quest For Value Advisors
c/o Oppenheimer Capital
225 Liberty Street
New York, New York 10281
Attention: Thomas E. Duggan
Secretary and General Counsel
Telecopier: 212-349-4759
XVII. Questions of Interpretation.
This Agreement shall be governed by the laws of the State of New
York applicable to agreements made and to be performed entirely within
the State of New York (without regard to any conflicts of law
principles thereof). Any question of interpretation of any term or
provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to
interpretations thereof, if any, by the United States Courts or, in the
absence of any controlling decision of any such court, by rules,
regulations or orders of the SEC issued pursuant to the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act reflected
in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the
effect of such rule, regulation or order.
XVIII. Form ADV - Delivery.
The Adviser hereby acknowledges that it has received from the
Subadviser a copy of the Subadviser's Form ADV, Part II as currently
filed, at least 48 hours prior to entering into this Agreement and that
it has read and understood the disclosures set forth in the
Subadviser's Form ADV, Part II.
XIX. Miscellaneous.
The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their
respective successors.
XX. Counterparts.
This Agreement may be executed in counterparts, each of which
shall constitute an original and both of which, collectively, shall
constitute one agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed in duplicate by their respective officers as of the 22nd
day of November, 1995.
OPPENHEIMER MANAGEMENT CORPORATION
By:___________________________________
Name: Andrew J. Donohue
Title: Executive Vice President
ADVISORS
By: OPPENHEIMER FINANCIAL CORP.
a general partner
By:____________________________________
Name:
Title:
LEGAG/QUEST#3
<PAGE>
The universe of funds to which Class A shares of funds subadvised
by OpCap Advisors will be compared to so that it can be determined in
which quartile the performance ranks shall consist of those funds with
the same Lipper investment objective being offered as the only class of
shares of such fund or, in the case where there is more than one class
of shares being offered, with a front-end load (typically referred to
as Class A shares).
The present Lipper investment objective categories for the funds
are:
Fund Lipper Category
Oppenheimer Quest Value Fund, Inc. CA - Capital
Appreciation
Oppenheimer Quest Global Value Fund, Inc. GL - Global
Oppenheimer Quest Opportunity Value Fund FX - Flexible Portfolio
Oppenheimer Quest Small Cap Value Fund SG - Small Company
Growth
Oppenheimer Quest Growth & Income Value Fund GI - Growth & Income
Oppenheimer Quest Officers Value Fund To Be Determined
LEGAG/QUEST#3
GENERAL DISTRIBUTOR'S AGREEMENT
BETWEEN
OPPENHEIMER QUEST VALUE FUND, INC.
AND
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Date: November 22, 1995
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
Two World Trade Center, Suite 3400
New York, NY 10048-0203
Dear Sirs:
OPPENHEIMER QUEST VALUE FUND, INC., a Maryland corporation (the
"Fund"), is registered as an investment company under the Investment
Company Act of 1940 (the "1940 Act"), and an indefinite number of shares
of its capital stock, consisting of two or more classes of shares
("Shares") have been registered under the Securities Act of 1933 (the
"1933 Act") to be offered for sale to the public in a continuous public
offering in accordance with the terms and conditions set forth in the
Prospectus and Statement of Additional Information ("SAI") included in the
Fund's Registration Statement as it may be amended from time to time (the
"current Prospectus and/or SAI").
In this connection, the Fund desires that your firm (the "General
Distributor") act in a principal capacity as General Distributor for the
sale and distribution of Shares which have been registered as described
above and of any additional Shares which may become registered during the
term of this Agreement. You have advised the Fund that you are willing
to act as such General Distributor, and it is accordingly agreed by and
between us as follows:
1. Appointment of the Distributor. The Fund hereby appoints you
as the sole General Distributor, pursuant to the aforesaid continuous
public offering of its Shares, and the Fund further agrees from and after
the date of this Agreement, that it will not, without your consent, sell
or agree to sell any Shares otherwise than through you, except (a) the
Fund may itself sell Shares without sales charge as an investment to the
officers, trustees or directors and bona fide present and former full-time
employees of the Fund, the Fund's Investment Adviser and affiliates
thereof, and to other investors who are identified in the current
Prospectus and/or SAI as having the privilege to buy Shares at net asset
value; (b) the Fund may issue Shares in connection with a merger,
consolidation or acquisition of assets on such basis as may be authorized
or permitted under the 1940 Act; (c) the Fund may issue Shares for the
reinvestment of dividends and other distributions of the Fund or of any
other Fund if permitted by the current Prospectus and/or SAI; and (d) the
Fund may issue Shares as underlying securities of a unit investment trust
if such unit investment trust has elected to use Shares as an underlying
investment; provided that in no event as to any of the foregoing
exceptions shall Shares be issued and sold at less than the then-existing
net asset value.
2. Sale of Shares. You hereby accept such appointment and agree
to use your best efforts to sell Shares, provided, however, that when
requested by the Fund at any time because of market or other economic
considerations or abnormal circumstances of any kind, or when agreed to
by mutual consent of the Fund and the General Distributor, you will
suspend such efforts. The Fund may also withdraw the offering of Shares
at any time when required by the provisions of any statute, order, rule
or regulation of any governmental body having jurisdiction. It is
understood that you do not undertake to sell all or any specific number
of Shares.
3. Sales Charge. Shares shall be sold by you at net asset value
plus a front-end sales charge not in excess of 8.5% of the offering price,
but which front-end sales charge shall be proportionately reduced or
eliminated for larger sales and under other circumstances, in each case
on the basis set forth in the Fund's current Prospectus and/or SAI. The
redemption proceeds of shares offered and sold at net asset value with or
without a front-end sales charge may be subject to a contingent deferred
sales charge ("CDSC") under the circumstances described in the current
Prospectus and/or SAI. You may reallow such portion of the front-end
sales charge to dealers or cause payment (which may exceed the front-end
sales charge, if any) of commissions to brokers through which sales are
made, as you may determine, and you may pay such amounts to dealers and
brokers on sales of shares from your own resources (such dealers and
brokers shall collectively include all domestic or foreign institutions
eligible to offer and sell the Shares), and in the event the Fund has more
than one class of Shares outstanding, then you may impose a front-end
sales charge and/or a CDSC on Shares of one class that is different from
the charges imposed on Shares of the Fund's other class(es), in each case
as set forth in the current Prospectus and/or SAI, provided the front-end
sales charge and CDSC to the ultimate purchaser do not exceed the
respective levels set forth for such category of purchaser in the Fund's
current Prospectus and/or SAI.
4. Purchase of Shares.
(a) As General Distributor, you shall have the right to accept
or reject orders for the purchase of Shares at your
discretion. Any consideration which you may receive in
connection with a rejected purchase order will be returned
promptly.
(b) You agree promptly to issue or to cause the duly appointed
transfer or shareholder servicing agent of the Fund to
issue as your agent confirmations of all accepted purchase
orders and to transmit a copy of such confirmations to the
Fund. The net asset value of all Shares which are the
subject of such confirmations, computed in accordance with
the applicable rules under the 1940 Act, shall be a
liability of the General Distributor to the Fund to be
paid promptly after receipt of payment from the
originating dealer or broker (or investor, in the case of
direct purchases) and not later than eleven business days
after such confirmation even if you have not actually
received payment from the originating dealer or broker or
investor. In no event shall the General Distributor make
payment to the Fund later than permitted by applicable
rules of the National Association of Securities Dealers,
Inc.
(c) If the originating dealer or broker shall fail to make
timely settlement of its purchase order in accordance with
applicable rules of the National Association of Securities
Dealers, Inc., or if a direct purchaser shall fail to make
good payment for shares in a timely manner, you shall have
the right to cancel such purchase order and, at your
account and risk, to hold responsible the originating
dealer or broker, or investor. You agree promptly to
reimburse the Fund for losses suffered by it that are
attributable to any such cancellation, or to errors on
your part in relation to the effective date of accepted
purchase orders, limited to the amount that such losses
exceed contemporaneous gains realized by the Fund for
either of such reasons with respect to other purchase
orders.
(d) In the case of a canceled purchase for the account of a
directly purchasing shareholder, the Fund agrees that if
such investor fails to make you whole for any loss you pay
to the Fund on such canceled purchase order, the Fund will
reimburse you for such loss to the extent of the aggregate
redemption proceeds of any other shares of the Fund owned
by such investor, on your demand that the Fund exercise
its right to claim such redemption proceeds. The Fund
shall register or cause to be registered all Shares sold
to you pursuant to the provisions hereof in such names and
amounts as you may request from time to time and the Fund
shall issue or cause to be issued certificates evidencing
such Shares for delivery to you or pursuant to your
direction if and to the extent that the shareholder
account in question contemplates the issuance of such
certificates. All Shares when so issued and paid for,
shall be fully paid and non-assessable by the Fund (which
shall not prevent the imposition of any CDSC that may
apply) to the extent set forth in the current Prospectus
and/or SAI.
5. Repurchase of Shares.
(a) In connection with the repurchase of Shares, you are
appointed and shall act as Agent of the Fund. You are
authorized, for so long as you act as General Distributor
of the Fund, to repurchase, from authorized dealers,
certificated or uncertificated shares of the Fund
("Shares") on the basis of orders received from each
dealer ("authorized dealer") with which you have a dealer
agreement for the sale of Shares and permitting resales of
Shares to you, provided that such authorized dealer, at
the time of placing such resale order, shall represent (i)
if such Shares are represented by certificate(s), that
certificate(s) for the Shares to be repurchased have been
delivered to it by the registered owner with a request for
the redemption of such Shares executed in the manner and
with the signature guarantee required by the then-
currently effective Prospectus of the Fund, or (ii) if
such Shares are uncertificated, that the registered
owner(s) has delivered to the dealer a request for the
redemption of such Shares executed in the manner and with
the signature guarantee required by the then-currently
effective Prospectus of the Fund.
(b) You shall (a) have the right in your discretion to accept
or reject orders for the repurchase of Shares; (b)
promptly transmit confirmations of all accepted repurchase
orders; and (c) transmit a copy of such confirmation to
the Fund, or, if so directed, to any duly appointed
transfer or shareholder servicing agent of the Fund. In
your discretion, you may accept repurchase requests made
by a financially responsible dealer which provides you
with indemnification in form satisfactory to you in
consideration of your acceptance of such dealer's request
in lieu of the written redemption request of the owner of
the account; you agree that the Fund shall be a third
party beneficiary of such indemnification.
(c) Upon receipt by the Fund or its duly appointed transfer or
shareholder servicing agent of any certificate(s) (if any
has been issued) for repurchased Shares and a written
redemption request of the registered owner(s) of such
Shares executed in the manner and bearing the signature
guarantee required by the then-currently effective
Prospectus or SAI of the Fund, the Fund will pay or cause
its duly appointed transfer or shareholder servicing agent
promptly to pay to the originating authorized dealer the
redemption price of the repurchased Shares (other than
repurchased Shares subject to the provisions of part (d)
of Section 5 of this Agreement) next determined after your
receipt of the dealer's repurchase order.
(d) Notwithstanding the provisions of part (c) of Section 5 of
this Agreement, repurchase orders received from an
authorized dealer after the determination of the Fund's
redemption price on a regular business day will receive
that day's redemption price if the request to the dealer
by its customer to arrange such repurchase prior to the
determination of the Fund's redemption price that day
complies with the requirements governing such requests as
stated in the current Prospectus and/or SAI of the Fund.
(e) You will make every reasonable effort and take all
reasonably available measures to assure the accurate
performance of all services to be performed by you
hereunder within the requirements of any statute, rule or
regulation pertaining to the redemption of shares of a
regulated investment company and any requirements set
forth in the then-current Prospectus and/or SAI of the
Fund. You shall correct any error or omission made by you
in the performance of your duties hereunder of which you
shall have received notice in writing and any necessary
substantiating data; and you shall hold the Fund harmless
from the effect of any errors or omissions which might
cause an over- or under-redemption of the Fund's Shares
and/or an excess or non-payment of dividends, capital
gains distributions, or other distributions.
(f) In the event an authorized dealer initiating a repurchase
order shall fail to make delivery or otherwise settle such
order in accordance with the rules of the National
Association of Securities Dealers, Inc., you shall have
the right to cancel such repurchase order and, at your
account and risk, to hold responsible the originating
dealer. In the event that any cancellation of a Share
repurchase order or any error in the timing of the
acceptance of a Share repurchase order shall result in a
gain or loss to the Fund, you agree promptly to reimburse
the Fund for any amount by which any loss shall exceed
then-existing gains so arising.
6. 1933 Act Registration. The Fund has delivered to you a copy of
its current Prospectus and SAI. The Fund agrees that it will use its best
efforts to continue the effectiveness of the Registration Statement under
the 1933 Act. The Fund further agrees to prepare and file any amendments
to its Registration Statement as may be necessary and any supplemental
data in order to comply with the 1933 Act. The Fund will furnish you at
your expense with a reasonable number of copies of the Prospectus and SAI
and any amendments thereto for use in connection with the sale of Shares.
7. 1940 Act Registration. The Fund has already registered under
the 1940 Act as an investment company, and it will use its best efforts
to maintain such registration and to comply with the requirements of the
1940 Act.
8. State Blue Sky Qualification. At your request, the Fund will
take such steps and pay such fees and expenses as may be necessary and
feasible to qualify Shares for sale in states, territories or dependencies
of the United States, the District of Columbia, the Commonwealth of Puerto
Rico and in foreign countries, in accordance with the laws thereof, and
to renew or extend any such qualification; provided, however, that the
Fund shall not be required to qualify shares or to maintain the
qualification of shares in any jurisdiction where it shall deem such
qualification disadvantageous to the Fund.
9. Duties of Distributor. You agree that:
(a) Neither you nor any of your officers will take any long or
short position in the Shares, but this provision shall not
prevent you or your officers from acquiring Shares for
investment purposes only; and
(b) You shall furnish to the Fund any pertinent information
required to be inserted with respect to you as General
Distributor within the purview of the Securities Act of
1933 in any reports or registrations required to be filed
with any governmental authority; and
(c) You will not make any representations inconsistent with
the information contained in the current Prospectus and/or
SAI; and
(d) You shall maintain such records as may be reasonably
required for the Fund or its transfer or shareholder
servicing agent to respond to shareholder requests or
complaints, and to permit the Fund to maintain proper
accounting records, and you shall make such records
available to the Fund and its transfer agent or
shareholder servicing agent upon request; and
(e) In performing under this Agreement, you shall comply with
all requirements of the Fund's current Prospectus and/or
SAI and all applicable laws, rules and regulations with
respect to the purchase, sale and distribution of Shares.
10. Allocation of Costs. The Fund shall pay the cost of composition
and printing of sufficient copies of its Prospectus and SAI as shall be
required for periodic distribution to its shareholders and the expense of
registering Shares for sale under federal securities laws. You shall pay
the expenses normally attributable to the sale of Shares, other than as
paid under the Fund's distribution plans under Rule 12b-1 of the 1940 Act,
including the cost of printing and mailing of the Prospectus (other than
those furnished to existing shareholders) and any sales literature used
by you in the public sale of the Shares.
11. Duration. This Agreement shall take effect on the date first
written above, and shall supersede any and all prior General Distributor's
Agreements by and among the Fund and you. Unless earlier terminated
pursuant to paragraph 12 hereof, this Agreement shall remain in effect
until September 30, 1997. This Agreement shall continue in effect from
year to year thereafter, provided that such continuance shall be
specifically approved at least annually: (a) by the Fund's Board of
Directors or by vote of a majority of the voting securities of the Fund;
and (b) by the vote of a majority of the Directors, who are not parties
to this Agreement or "interested persons" (as defined in the 1940 Act) of
any such person, cast in person at a meeting called for the purpose of
voting on such approval.
12. Termination. This Agreement may be terminated (a) by the
General Distributor at any time without penalty by giving sixty days'
written notice (which notice may be waived by the Fund); (b) by the Fund
at any time without penalty upon sixty days' written notice to the General
Distributor (which notice may be waived by the General Distributor); or
(c) by mutual consent of the Fund and the General Distributor, provided
that such termination by the Fund pursuant to part (b) of this Section 12
shall be directed or approved by the Board of Directors of the Fund or by
the vote of the holders of a "majority" of the outstanding voting
securities of the Fund. In the event this Agreement is terminated, the
General Distributor shall be entitled to be paid the CDSC under paragraph
3 hereof on the redemption proceeds of Shares sold prior to the effective
date of such termination.
13. Assignment. This Agreement may not be amended or changed except
in writing and shall be binding upon and shall enure to the benefit of the
parties hereto and their respective successors; however, this Agreement
shall not be assigned by either party and shall automatically terminate
upon assignment.
14. Section Headings. The heading of each section is for
descriptive purposes only, and such headings are not to be construed or
interpreted as part of this Agreement.
If the foregoing is in accordance with your understanding, so
indicate by signing in the space provided below.
OPPENHEIMER QUEST VALUE FUND, INC.
By: ______________________________
Accepted:
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By _____________________________
Andrew J. Donohue
Executive Vice President
CUSTODIAN CONTRACT
Between
QUEST FOR VALUE FUND, INC.
and
STATE STREET BANK AND TRUST COMPANY
<PAGE>
TABLE OF CONTENTS
Page
1.Employment of Custodian and Property to be Held By It 2
2. Duties of the Custodian with Respect to Property of the
Fund Held by the Custodian 2
2.1 Holding Securities 2
2.2 Delivery of Securities 3
2.3 Registration of Securities 5
2.4 Bank Accounts 5
2.5 Payments For Shares 5
2.6 Availability of Federal Funds 6
2.7 Collection of Income 6
2.8 Payment of Fund Monies 6
2.9 Liability for Payment in Advance of Receipt
of Securities Purchased 7
2.10 Payments for Repurchases or Redemption
of Shares of the Fund 8
2.11 Appointment of Agents 8
2.12 Deposit of Fund Assets in Securities System 8
2.12A Fund Assets Held in the Custodian's Direct
Paper System 10
2.13 Segregated Account 10
2.14 Ownership Certificates for Tax Purposes 11
2.15 Proxies 11
2.16 Communications Relating to Fund Portfolio Securities 11
2.17 Proper Instructions 12
2.18 Actions Permitted Without Express Authority 12
2.19 Evidence of Authority 12
3. Duties of the Custodian with Respect to the Books
of Account and Calculation of Net Asset Value and
Net Income 13
4. Records 13
5. Opinion of Fund's Independent Accountant 13
6. Reports to Fund by Independent Public Accountants 14
7. Compensation of Custodian 14
8. Responsibility of Custodian 14
9. Effective Period, Termination and Amendment 15
10. Successor Custodian 16
11. Interpretive and Additional Provisions 16
12. Massachusetts Law to Apply 17
13. Prior Contracts 17
<PAGE>
CUSTODIAN CONTRACT
This Contract between Quest for Value Fund, Inc., a corporation
organized and existing under the laws of Maryland, having its principal
place of business at 200 Liberty Street, New York, New York 10281,
hereinafter called the "Fund," and State Street Bank and Trust Company,
a Massachusetts trust company, having its principal place of business at
225 Franklin Street, Boston, Massachusetts 02110, hereinafter called the
"Custodian,"
WITNESSETH: that in consideration of the mutual covenants and
agreements hereinafter contained, the parties hereto agree as follows:
1. Employment of Custodian and Property to be Held by It
The Fund hereby employs the Custodian as the custodian of its assets
pursuant to the provisions of the Articles of Incorporation. The Fund
agrees to deliver to the Custodian all securities and cash owned by it,
and all payments of income, payments of principal or capital distributions
received by it with respect to all securities owned by the Fund from time
to time, and the cash consideration received by it for such new or
treasury shares of capital stock ("Shares") of the Fund as may be issued
or sold from time to time. The Custodian shall not be responsible for any
property of the Fund held or received by the Fund and not delivered to the
Custodian.
Upon receipt of "Proper Instructions" (within the meaning of Section
2.17), the Custodian shall from time to time employ one or more sub-
custodians, but only in accordance with an applicable vote by the Board
of Directors of the Fund, and provided that the Custodian shall have no
more or less responsibility or liability to the Fund on account of any
actions or omissions of any sub-custodian so employed than any such sub-
custodian has to the Custodian.
2. Duties of the Custodian with Respect to Property of the Fund Held By
the Custodian
2.1 Holding Securities. The Custodian shall hold and physically
segregate for the account of the Fund all non-cash property,
including all securities owned by the Fund, other than (a) securities
which are maintained pursuant to Section 2.12 in a clearing agency
which acts as a securities depository or in a book-entry system
authorized by the U.S. Department of the Treasury, collectively
referred to herein as "Securities System" and (b) commercial paper
of an issuer for which State Street Bank and Trust Company acts as
issuing and paying agent ("Direct Paper") which is deposited and/or
maintained in the Direct Paper System of the Custodian pursuant to
Section 2.12A.
2.2 Delivery of Securities. The Custodian shall release and deliver
securities owned by the Fund held by the Custodian or in a Securities
System account of the Custodian or in the Custodian's Direct Paper
book-entry system account ("Direct Paper Account") only upon receipt
of Proper Instructions, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
(1) Upon sale of such securities for the account of the Fund and receipt
of payment therefor;
(2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the Fund;
(3) In the case of a sale effected through a Securities System, in
accordance with the provisions of Section 2.12 hereof;
(4) To the depository agent in connection with tender or other similar
offers for portfolio securities of the Fund;
(5) To the issuer thereof or its agent when such securities are called,
redeemed, retired or otherwise become payable; provided that, in any
such case, the cash or other consideration is to be delivered to the
Custodian;
(6) To the issuer thereof, or its agent, for transfer into the name of
the Fund or into the name of any nominee or nominees of the Custodian
or into the name or nominee name of any agent appointed pursuant to
Section 2.11 or into the name or nominee name of any sub-custodian
appointed pursuant to Article 1; or for exchange for a different
number of bonds, certificates or other evidence representing the same
aggregate face amount or number of units; provided that, in any such
case, the new securities are to be delivered to the Custodian;
(7) Upon the sale of such securities for the account of the Fund, to the
broker or its clearing agent, against a receipt, for examination in
accordance with "street delivery" custom; provided that in any such
case, the Custodian shall have no responsibility or liability for any
loss arising from the delivery of such securities prior to receiving
payment for such securities except as may arise from the Custodian's
own negligence or willful misconduct;
(8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or readjustment of
the securities of the issuer of such securities, or pursuant to
provisions for conversion contained in such securities, or pursuant
to any deposit agreement; provided that, in any such case, the new
securities and cash, if any, are to be delivered to the Custodian;
(9) In the case of warrants, rights or similar securities, the surrender
thereof in the exercise of such warrants, rights or similar
securities or the surrender of interim receipts or temporary
securities for definitive securities; provided that, in any such
case, the new securities and cash, if any, are to be delivered to the
Custodian;
(10) For delivery in connection with any loans of securities made by the
Fund, but only against receipt of adequate collateral as agreed upon
from time to time by the Custodian and the Fund, which may be in the
form of cash or obligations issued by the United States government,
its agencies or instrumentalities, except that in connection with any
loans for which collateral is to be credited to the Custodian's
account in the book-entry system authorized by the U.S. Department
of the Treasury, the Custodian will not be held liable or responsible
for the delivery of securities owned by the Fund prior to the receipt
of such collateral;
(11) For delivery as security in connection with any borrowings by the
Fund requiring a pledge of assets by the Fund, but only against
receipt of amounts borrowed;
(12) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian and a broker-dealer registered under the
Securities Exchange Act of 1934 (the "Exchange Act") and a member of
The National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities exchange, or
of any similar organization or organizations, regarding escrow or
other arrangements in connection with transactions by the Fund;
(13) For delivery in accordance with the provisions of any agreement among
the Fund, the Custodian, and a Futures Commission Merchant registered
under the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission and/or any Contract
Market, or any similar organization or organizations, regarding
account deposits in connection with transactions by the Fund;
(14) Upon receipt of instructions from the transfer agent ("Transfer
Agent") for the Fund, for delivery to such Transfer Agent or to the
holders of shares in connection with distributions in kind, as may
be described from time to time in the Fund's currently effective
prospectus and statement of additional information ("prospectus"),
in satisfaction of requests by holders of Shares for repurchase or
redemption; and
(15) For any other proper corporate purpose, but only upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, specifying the securities to be delivered, setting forth
the purpose for which such delivery is to be made, declaring such
purpose to be a proper corporate purpose, and naming the person or
persons to whom delivery of such securities shall be made.
2.3 Registration of Securities. Securities held by the Custodian (other
than bearer securities) shall be registered in the name of the Fund
or in the name of any nominee of the Fund or of any nominee of the
Custodian which nominee shall be assigned exclusively to the Fund,
unless the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment
companies having the same investment adviser as the Fund, or in the
name or nominee name of any agent appointed pursuant to Section 2.11
or in the name or nominee name of any sub-custodian appointed
pursuant to Article 1. All securities accepted by the Custodian on
behalf of the Fund under the terms of this Contract shall be in
"street name" or other good delivery form. If, however, the Fund
directs the Custodian to maintain securities in "street name," the
Custodian shall utilize its best efforts only to timely collect
income due the Fund on such securities and to notify the Fund on a
best efforts basis only of relevant corporate actions including,
without limitation, pendency of calls, maturities, tender or exchange
offers.
2.4 Bank Accounts. The Custodian shall open and maintain a separate bank
account or accounts in the name of the Fund, subject only to draft
or order by the Custodian acting pursuant to the terms of this
Contract, and shall hold in such account or accounts, subject to the
provisions hereof, all cash received by it from or for the account
of the Fund, other than cash maintained by the Fund in a bank account
established and used in accordance with Rule 17f-3 under the
Investment Company Act of 1940. Funds held by the Custodian for the
Fund may be deposited by it to its credit as Custodian in the Banking
Department of the Custodian or in such other banks or trust companies
as it may in its discretion deem necessary or desirable; provided,
however, that every such bank or trust company shall be qualified to
act as a custodian under the Investment Company Act of 1940 and that
each such bank or trust company and the funds to be deposited with
each such bank or trust company shall be approved by vote of a
majority of the Board of Directors of the Fund. Such funds shall be
deposited by the Custodian in its capacity as Custodian and shall be
withdrawable by the Custodian only in that capacity.
2.5 Payments for Shares. The Custodian shall receive from the
distributor for the Fund's Shares or from the Transfer Agent of the
Fund and deposit into the Fund's account such payments as are
received for Shares of the Fund issued or sold from time to time by
the Fund. The Custodian will provide timely notification to the Fund
and the Transfer Agent of any receipt by it of payments for Shares
of the Fund.
2.6 Availability of Federal Funds. Upon mutual agreement between the
Fund and the Custodian, the Custodian shall, upon the receipt of
Proper Instructions, make federal funds available to the Fund as of
specified times agreed upon from time to time by the Fund and the
Custodian in the amount of checks received in payment for Shares of
the Fund which are deposited into the Fund's account.
2.7 Collection of Income. Subject to the provisions of Section 2.3, the
Custodian shall collect on a timely basis all income and other
payments with respect to registered securities held hereunder to
which the Fund shall be entitled either by law or pursuant to custom
in the securities business, and shall collect on a timely basis all
income and other payments with respect to bearer securities if, on
the date of payment by the issuer, such securities are held by the
Custodian or its agent thereof and shall credit such income, as
collected, to the Fund's custodian account. Without limiting the
generality of the foregoing, the Custodian shall detach and present
for payment all coupons and other income items requiring presentation
as and when they become due and shall collect interest when due on
securities held hereunder. Income due the Fund securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the
responsibility of the Fund. The Custodian will have no duty or
responsibility in connection therewith, other than to provide the
Fund with such information or data as may be necessary to assist the
Fund in arranging for the timely delivery to the Custodian of the
income to which the Fund is properly entitled.
2.8 Payment of Fund Monies. Upon receipt of Proper Instructions, which
may be continuing instructions when deemed appropriate by the
parties, the Custodian shall pay out monies of the Fund in the
following cases only:
(1) Upon the purchase of securities, options, futures contracts or
options on futures contracts for the account of the Fund but only (a)
against the delivery of such securities, or evidence of title to such
options, futures contracts or options on futures contracts, to the
Custodian (or any bank, banking firm or trust company doing business
in the United States or abroad which is qualified under the
Investment Company Act of 1940, as amended, to act as a custodian and
has been designated by the Custodian as its agent for this purpose)
registered in the name of the Fund or in the name of a nominee of the
Custodian referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a Securities
System, in accordance with the conditions set forth in Section 2.12
hereof; (c) in the case of a purchase involving the Direct Paper
System, in accordance with the conditions set forth in Section 2.12A;
(d) in the case of repurchase agreements entered into between the
Fund and the Custodian, or another bank, or a broker-dealer which is
a member of the NASD, (i) against delivery of the securities either
in certificate form or through an entry crediting the Custodian's
account at the Federal Reserve Bank with such securities or (ii)
against delivery of the receipt evidencing purchase by the Fund of
securities owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from the
Fund or (e) for transfer to a time deposit account of the Fund in any
bank, whether domestic or foreign; such transfer may be effected
prior to receipt of a confirmation from a broker and/or the
applicable bank pursuant to Proper Instructions from the Fund as
defined in Section 2.17;
(2) In connection with conversion, exchange or surrender of securities
owned by the Fund as set forth in Section 2.2 hereof;
(3) For the redemption or repurchase of Shares issued by the Fund as set
forth in Section 2.10 hereof;
(4) For the payment of any expense or liability incurred by the Fund,
including but not limited to the following payments for the account
of the Fund: interest, taxes, management, accounting, transfer agent
and legal fees, and operating expenses of the Fund whether or not
such expenses are to be in whole or part capitalized or treated as
deferred expenses;
(5) For the payment of any dividends declared pursuant to the governing
documents of the Fund;
(6) For payment of the amount of dividends received in respect of
securities sold short;
(7) For any other proper purpose, but only upon receipt of, in addition
to Proper Instructions, a certified copy of a resolution of the Board
of Directors or of the Executive Committee of the Fund signed by an
officer of the Fund and certified by its Secretary or an Assistant
Secretary, specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such purpose
to be a proper purpose, and naming the person or persons to whom such
payment is to be made.
2.9 Liability for Payment in Advance of Receipt of Securities
Purchased.
Except as specifically stated otherwise in this Contract, in any and
every case where payment for purchase of securities for the account
of the Fund is made by the Custodian in advance of receipt of the
securities purchased in the absence of specific written instructions
from the Fund to so pay in advance, the Custodian shall be absolutely
liable to the Fund for such securities to the same extent as if the
securities had been received by the Custodian.
2.10 Payments for Repurchase or Redemptions of Shares of the Fund.
From such funds as may be available for the purpose but subject to
the limitations of the Articles of Incorporation and any applicable
votes of the Board of Directors of the Fund pursuant thereto, the
Custodian shall, upon receipt of instructions from the Transfer
Agent, make funds available for payment to holders of Shares who have
delivered to the Transfer Agent a request for redemption or
repurchase of their Shares. In connection with the redemption or
repurchase of Shares of the Fund, the Custodian is authorized upon
receipt of instructions from the Transfer Agent to wire funds to or
through a commercial bank designated by redeeming shareholders. In
connection with the redemption or repurchase of Shares of the Fund,
the Custodian shall honor checks drawn on the Custodian by a holder
of Shares, which checks have been furnished by the Fund to the holder
of Shares, when presented to the Custodian in accordance with such
procedures and controls as are mutually agreed upon from time to time
between the Fund and the Custodian.
2.11 Appointment of Agents. The Custodian may at any time or times in its
discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the Investment Company
Act of 1940, as amended, to act as a custodian, as its agent to carry
out such of the provisions of this Article 2 as the Custodian may
from time to time direct; provided, however, that the appointment of
any agent shall not relieve the Custodian of its responsibilities or
liabilities hereunder.
2.12 Deposit of Fund Assets in Securities Systems. The Custodian may
deposit and/or maintain securities owned by the Fund in a clearing
agency registered with the Securities and Exchange Commission under
Section 17A of the Securities Exchange Act of 1934, which acts as a
securities depository, or in the book-entry system authorized by the
U.S. Department of the Treasury and certain federal agencies,
collectively referred to herein as "Securities System" in accordance
with applicable Federal Reserve Board and Securities and Exchange
Commission rules and regulations, if any, and subject to the
following provisions:
(1) The Custodian may keep securities of the Fund in a Securities System
provided that such securities are represented in an account
("Account") of the Custodian in the Securities System which shall not
include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
(2) The records of the Custodian with respect to securities of the Fund
which are maintained in a Securities System shall identify by book-
entry those securities belonging to the Fund;
(3) The Custodian shall pay for securities purchased for the account of
the Fund upon (i) receipt of advice from the Securities System that
such securities have been transferred to the Account, and (ii) the
making of an entry on the records of the Custodian to reflect such
payment and transfer for the account of the Fund. The Custodian
shall transfer securities sold for the account of the Fund upon (i)
receipt of advice from the Securities System that payment for such
securities has been transferred to the Account, and (ii) the making
of an entry on the records of the Custodian to reflect such transfer
and payment for the account of the Fund. Copies of all advices from
the Securities System of transfers of securities for the account of
the Fund shall identify the Fund, be maintained for the Fund by the
Custodian and be provided to the Fund at its request. Upon request,
the Custodian shall furnish the Fund confirmation of each transfer
to or from the account of the Fund in the form of a written advice
or notice and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System
for the account of the Fund.
(4) The Custodian shall provide the Fund with any report obtained by the
Custodian on the Securities System's accounting system, internal
accounting control and procedures for safeguarding domestic
securities deposited in the Securities System;
(5) The Custodian shall have received the initial or annual certificate,
as the case may be, required by Article 9 hereof;
(6) Anything to the contrary in this Contract notwithstanding, the
Custodian shall be liable to the Fund for any loss or damage to the
Fund resulting from use of the Securities System by reason of any
negligence, misfeasance or misconduct of the Custodian or any of its
agents or of any of its or their employees or from failure of the
Custodian or any such agent to enforce effectively such rights as it
may have against the Securities System; at the election of the Fund,
it shall be entitled to be subrogated to the rights of the Custodian
with respect to any claim against the Securities System or any other
person which the Custodian may have as a consequence of any such loss
or damage if and to the extent that the Fund has not been made whole
for any such loss or damage.
<PAGE>
2.12A Fund Assets Held in the Custodian's Direct Paper System
The Custodian may deposit and/or maintain securities owned by the
Fund in the Direct Paper System of the Custodian subject to the
following provisions:
(1) No transaction relating to securities in the Direct Paper System will
be effected in the absence of Proper Instructions;
(2) The Custodian may keep securities of the Fund in the Direct Paper
System only if such securities are represented in an account
("Account") of the Custodian in the Direct Paper System which shall
not include any assets of the Custodian other than assets held as a
fiduciary, custodian or otherwise for customers;
(3) The records of the Custodian with respect to securities of the Fund
which are maintained in the Direct Paper System shall identify by
book-entry those securities belonging to the Fund;
(4) The Custodian shall pay for securities purchased for the account of
the Fund upon the making of an entry on the records of the Custodian
to reflect such payment and transfer of securities to the account of
the Fund. The Custodian shall transfer securities sold for the
account of the Fund upon the making of an entry on the records of the
Custodian to reflect such transfer and receipt of payment for the
account of the Fund;
(5) The Custodian shall furnish the Fund confirmation of each transfer
to or from the account of the Fund, in the form of a written advice
or notice, of Direct Paper on the next business day following such
transfer and shall furnish to the Fund copies of daily transaction
sheets reflecting each day's transactions in the Securities System
for the account of the Fund;
(6) The Custodian shall provide the Fund with any report on its system
of internal accounting control as the Fund may reasonably request
from time to time;
2.13 Segregated Account. The Custodian shall upon receipt of Proper
Instructions establish and maintain a segregated account or accounts
for and on behalf of the Fund, into which account or accounts may be
transferred cash and/or securities, including securities maintained
in an account by the Custodian pursuant to Section 2.12 hereof, (i)
in accordance with the provisions of any agreement among the Fund,
the Custodian and a broker-dealer registered under the Exchange Act
and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance
with the rules of The Options Clearing Corporation and of any
registered national securities exchange (or the Commodity Futures
Trading Commission or any registered contract market), or of any
similar organization or organizations, regarding escrow or other
arrangements in connection with transactions by the Fund, (ii) for
purposes of segregating cash or government securities in connection
with options purchased, sold or written by the Fund or commodity
futures contracts or options thereon purchased or sold by the Fund,
(iii) for the purposes of compliance by the Fund with the procedures
required by Investment Company Act Release No. 10666, or any
subsequent release or releases of the Securities and Exchange
Commission relating to the maintenance of segregated accounts by
registered investment companies and (iv) for other proper corporate
purposes, but only, in the case of clause (iv), upon receipt of, in
addition to Proper Instructions, a certified copy of a resolution of
the Board of Directors or of the Executive Committee signed by an
officer of the Fund and certified by the Secretary or an Assistant
Secretary, setting forth the purpose or purposes of such segregated
account and declaring such purposes to be proper corporate purposes.
2.14 Ownership Certificates for Tax Purposes. The Custodian shall execute
ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other
payments with respect to securities of the Fund held by it and in
connection with transfers of such securities.
2.15 Proxies. The Custodian shall, with respect to the securities held
hereunder, cause to be promptly executed by the registered holder of
such securities, if the securities are registered otherwise than in
the name of the Fund or a nominee of the Fund, all proxies, without
indication of the manner in which such proxies are to be voted, and
shall promptly deliver to the Fund such proxies, all proxy soliciting
materials and all notices relating to such securities.
2.16 Communications Relating to Fund Portfolio Securities
Subject to the provisions of Section 2.3, the Custodian shall
transmit promptly to the Fund all written information (including,
without limitation, pendency of calls and maturities of securities
and expirations of rights in connection therewith and notices of
exercise of call and put options' written by the Fund and the
maturity of futures contracts purchased or sold by the Fund) received
by the Custodian from issuers of the securities being held for the
Fund. With respect to tender or exchange offers, the Custodian shall
transmit promptly to the Fund all written information received by the
Custodian from issuers of the securities whose tender or exchange is
sought and from the party (or his agents) making the tender or
exchange offer. If the Fund desires to take action with respect to
any tender offer, exchange offer or any other similar transaction,
the Fund shall notify the Custodian at least three business days
prior to the date on which the Custodian is to take such action.
2.17 Proper Instructions. Proper Instructions as used throughout this
Article 2 means a writing signed or initialled by one or more person
or persons as the Board of Directors shall have from time to time
authorized. Each such writing shall set forth the specific
transaction or type of transaction involved, including a specific
statement of the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if the Custodian
reasonably believes them to have been given by a person authorized
to give such instructions with respect to the transaction involved.
The Fund shall cause all oral instructions to be confirmed in
writing. Upon receipt of a certificate of the Secretary or an
Assistant Secretary as to the authorization by the Board of Directors
of the Fund accompanied by a detailed description of procedures
approved by the Board of Directors, Proper Instructions may include
communications effected directly between electro-mechanical or
electronic devices provided that the Board of Directors and the
Custodian are satisfied that such procedures afford adequate
safeguards for the Fund's assets. For purposes of this Section,
Proper Instructions shall include instructions received by the
Custodian pursuant to any three-party agreement which requires a
segregated asset account in accordance with Section 2.13.
2.18 Actions Permitted without Express Authority. The Custodian may in
its discretion, without express authority from the Fund:
1) make payments to itself or others for minor expenses of handling
securities or other similar items relating to its duties under this
Contract, provided that all such payments shall be accounted for to
the Fund;
2) surrender securities in temporary form for securities in definitive
form;
3) endorse for collection, in the name of the Fund, checks, drafts and
other negotiable instruments; and
4) in general, attend to all non-discretionary details in connection
with the sale, exchange, substitution, purchase, transfer and other
dealings with the securities and property of the Fund except as
otherwise directed by the Board of Directors of the Fund.
2.19 Evidence of Authority. The Custodian shall be protected in acting
upon any instructions, notice, request, consent, certificate or other
instrument or paper believed by it to be genuine and to have been
properly executed by or on behalf of the Fund. The Custodian may
receive and accept a certified copy of a vote of the Board of
Directors of the Fund as conclusive evidence (a) of the authority of
any person to act in accordance with such vote or (b) of any
determination or of any action by the Board of Directors pursuant to
the Articles of Incorporation as described in such vote, and such
vote may be considered as in full force and effect until receipt by
the Custodian of written notice to the contrary.
3. Duties of Custodian with Respect to the Books of Account and
Calculation of Net Asset Value and Net Income
The Custodian shall cooperate with and supply necessary information to the
entity or entities appointed by the Board of Directors of the Fund to keep
the books of account of the Fund and/or compute the net asset value per
share of the outstanding shares of the Fund or, if directed in writing to
do so by the Fund, shall itself keep such books of account and/or compute
such net asset value per share. If so directed, the Custodian shall also
calculate daily the net income of the Fund as described in the Fund's
currently effective prospectus and shall advise the Fund and the Transfer
Agent daily of the total amounts of such net income and, if instructed in
writing by an officer of the Fund to do so, shall advise the Transfer
Agent periodically of the division of such net income among its various
components. The calculations of the net asset value per share and the
daily income of the Fund shall be made at the time of times described form
time to time in the Fund's currently effective prospectus.
4. Records
The Custodian shall create and maintain all records relating to its
activities and obligations under this Contract in such manner as will meet
the obligations of the Fund under the Investment Company of 1940, with
particular attention to Section 31 thereof and Rules 31a-1 and 31a-2
thereunder, applicable federal and state tax laws and any other law or
administrative rules or procedures which may be applicable to the Fund.
All such records shall be the property of the Fund and shall at all times
during the regular business hours of the Custodian be open for inspection
by duly authorized officers, employees or agents of the Fund and employees
and agents of the Securities and Exchange Commission. The Custodian
shall, at the Fund's request, supply the Fund with a tabulation of
securities owned by the Fund and held by the Custodian and shall, when
requested to do so by the Fund and for such compensation as shall be
agreed upon between the Fund and the Custodian, include certificate
numbers in such tabulations.
5. Opinion of Fund's Independent Account
The Custodian shall take all reasonable action, as the Fund may from time
to time request, to obtain from year to year favorable opinions from the
Fund's independent accountants with respect to its activities hereunder
in connection with the preparation of the Fund's Form N-1A, and Form N-SAR
or other annual reports to the Securities and Exchange Commission and with
respect to any other requirements of such Commission.
6. Reports to Fund by Independent Public Accountants
The Custodian shall provide the Fund, at such times as the Fund may
reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for
safeguarding securities, futures contracts and options on futures
contracts, including securities deposited and/or maintained in a
Securities System, relating to the services provided by the Custodian
under this Contract; such reports, shall be of sufficient scope and in
sufficient detail, as may reasonably be required by the Fund to provide
reasonable assurance that any material inadequacies would be disclosed by
such examination, and, if there are no such inadequacies, the reports
shall so state.
7. Compensation of Custodian.
The Custodian shall be entitled to reasonable compensation for its
services and expenses as Custodian, as agreed upon from time to time
between the Fund and the Custodian.
8. Responsibility of Custodian.
So long as and to the extent that it is in the exercise of reasonable
care, the Custodian shall not be responsible for the title, validity or
genuineness of any property or evidence of title thereto received by it
or delivered by it pursuant to this Contract and shall be held harmless
in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options agreement. The
Custodian shall be held to the exercise of reasonable care in carrying out
the provisions of this Contract, but shall be kept indemnified by and
shall be without liability to the Fund for any action taken or omitted by
it in good faith without negligence. It shall be entitled to rely on and
may act upon advice of counsel (who may be counsel for the Fund) on all
matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. Notwithstanding the foregoing, the
responsibility of the Custodian with respect to redemptions effected by
check shall be in accordance with a separate Agreement entered into
between the Custodian and the Fund.
If the Fund requires the Custodian to take any action with respect to
securities, which action involves the payment of money or which action
may, in the opinion of the Custodian, result in the Custodian or its
nominee assigned to the Fund being liable for the payment of money or
incurring liability of some other form, the Fund, as a prerequisite to
requiring the Custodian to take such action, shall provide indemnity to
the Custodian in an amount and form satisfactory to it.
If the Fund requires the Custodian to advance cash or securities for any
purpose or in the event that the Custodian or its nominee shall incur or
be assessed any taxes, charges, expenses, assessments, claims or
liabilities in connection with the performance of this Contract, except
such as may arise from its or its nominee's own negligent action,
negligent failure to act or willful misconduct, any property at any time
held for the account of the Fund shall be security therefor and should the
Fund fail to repay the Custodian promptly, the Custodian shall be entitled
to utilize available cash and to dispose of the Fund assets to the extent
necessary to obtain reimbursement.
9. Effective Period, Termination and Amendment.
This Contract shall become effective as of its execution, shall continue
in full force and effect until terminated as hereinafter provided, may be
amended at any time by mutual agreement of the parties hereto and may be
terminated by either party by an instrument in writing delivered or
mailed, postage prepaid to the other party, such termination to take
effect not sooner than thirty (30) days after the date of such delivery
or mailing; provided, however that the Custodian shall not act under
Section 2.12 hereof in the absence of receipt of an initial certificate
of the Secretary or an Assistant Secretary that the Board of Directors of
the Fund has approved the initial use of a particular Securities System
and the receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Directors has reviewed the use by the Fund of
such Securities System, as required in each case by Rule 17f-4 under the
Investment Company Act of 1940, as amended and that the Custodian shall
not act under Section 2.12A hereof in the absence of receipt of an initial
certificate of the Secretary or an Assistant Secretary that the Board of
Directors has approved the initial use of the Direct Paper System and the
receipt of an annual certificate of the Secretary or an Assistant
Secretary that the Board of Directors has reviewed the use by the Fund of
the Direct Paper System; provided further, however, that the Fund shall
not amend or terminate this Contract in contravention of any applicable
federal or state regulations, or any provision of the Articles of
Incorporation, and further provided, that the Fund may at any time by
action of its Board of Directors (i) substitute another bank or trust
company for the Custodian by giving notice as described above to the
Custodian, or (ii) immediately terminate this Contract in the event of the
appointment of a conservator or receiver for the Custodian by the
Comptroller of the Currency or upon the happening of a like event at the
direction of an appropriate regulatory agency or court of competent
jurisdiction.
Upon termination of the Contract, the Fund shall pay to the Custodian such
compensation as may be due as of the date of such termination and shall
likewise reimburse the Custodian for its costs, expenses and
disbursements.
10. Successor Custodian.
If a successor custodian shall be appointed by the Board of Directors of
the Fund, the Custodian shall, upon termination, deliver to such successor
custodian at the office of the Custodian, duly endorsed and in the form
for transfer, all securities then held by it hereunder and shall transfer
to an account of the successor custodian all of the Fund's securities held
in a Securities System.
If no such successor custodian shall be appointed, the Custodian shall,
in like manner, upon receipt of a certified copy of a vote of the Board
of Directors of the Fund, deliver at the office of the Custodian and
transfer such securities, funds and other properties in accordance with
such vote.
In the event that no written order designating a successor custodian or
certified copy of a vote of the Board of Directors shall have been
delivered to the Custodian on or before the date when such termination
shall become effective, then the Custodian shall have the right to deliver
to a bank or trust company, which is a "bank" as defined in the Investment
Company Act of 1940, doing business in Boston, Massachusetts, of its own
selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by the Custodian and all
instruments held by the Custodian relative thereto and all other property
held by it under this Contract and to transfer to an account of such
successor custodian all of the Fund's securities held in any Securities
System, Thereafter, such bank or trust company shall be the successor of
the Custodian under this Contract.
In the event that securities, funds and other properties remain in the
possession of the Custodian after the date of termination hereof owing to
failure of the Fund to procure the certified copy of the vote referred to
or of the Board of Directors to appoint a successor custodian, the
Custodian shall be entitled to fair compensation for its services during
such period as the Custodian retains possession of such securities, funds
and other properties and the provisions of this Contract relating to the
duties and obligations of the Custodian shall remain in full force and
effect.
11. Interpretive and Additional Provisions.
In connection with the operation of this Contract, the Custodian and the
Fund may from time to time agree on such provisions interpretive of or in
addition to the provisions of this Contract as may in their joint opinion
be consistent with the general tenor of this Contract. Any such
interpretive or additional provisions shall be in writing signed by both
parties and shall be annexed hereto, provided that no such interpretive
or additional provisions shall contravene any applicable federal or state
regulations or any provision of the Articles of Incorporation of the Fund.
No interpretive or additional provisions made as provided in the preceding
sentence shall be deemed to be an amendment of this Contract.
12. Massachusetts Law to Apply.
This Contract shall be construed and the provisions thereof interpreted
under and in accordance with laws of the Commonwealth of Massachusetts.
13. Prior Contracts.
This Contract supersedes and terminates, as of the date hereof, all prior
contracts between the Fund and the Custodian relating to the custody of
the Fund's assets.
IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative and
its seal to be hereunder affixed as of the 20th day of October, 1989.
ATTEST QUEST FOR VALUE FUND, INC.
__________________________ By: ______________________________
ATTEST STATE STREET BANK AND TRUST COMPANY
__________________________ By: _____________________________
Assistant Secretary Vice President
custody\225cust
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST VALUE FUND, INC.
FOR CLASS A SHARES OF
OPPENHEIMER QUEST VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT (the
"Plan") dated the 22nd day of November, 1995, by and between OPPENHEIMER
QUEST VALUE FUND, INC. (the "Corporation") for the account of its
OPPENHEIMER QUEST VALUE FUND, INC. (the "Fund") and OPPENHEIMER FUNDS
DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution plan for
Class A shares of the Fund (the "Shares"), contemplated by Rule 12b-1 (the
"Rule") under the Investment Company Act of 1940 (the "1940 Act"),
pursuant to which the Fund will compensate the Distributor for its
services incurred in connection with the distribution of Shares, and the
personal service and maintenance of shareholder accounts that hold Shares
("Accounts"). The Fund may act as distributor of securities of which it
is the issuer, pursuant to the Rule, according to the terms of this Plan.
The Distributor is authorized under the Plan to pay "Recipients," as
hereinafter defined, for rendering (1) distribution assistance in
connection with the sale of Shares and/or (2) administrative support
services with respect to Accounts. Such Recipients are intended to have
certain rights as third-party beneficiaries under this Plan. The terms
and provisions of this Plan shall be interpreted and defined in a manner
consistent with the provisions and definitions contained in (i) the 1940
Act, (ii) the Rule, (iii) Article III, Section 26, of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc., or its
successor (the "NASD Rules of Fair Practice") and (iv) any conditions
pertaining either to distribution-related expenses or to a plan of
distribution, to which the Fund is subject under any order on which the
Fund relies, issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall
have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other person
or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by Customers
(defined below) of the Recipient; (ii) shall furnish the Distributor (on
behalf of the Fund) with such information as the Distributor shall
reasonably request to answer such questions as may arise concerning the
sale of Shares; and (iii) has been selected by the Distributor to receive
payments under the Plan. Notwithstanding the foregoing, a majority of the
Corporation's Board of Directors (the "Board") who are not "interested
persons" (as defined in the 1940 Act) and who have no direct or indirect
financial interest in the operation of this Plan or in any agreements
relating to this Plan (the "Independent Directors") may remove any broker,
dealer, bank or other person or entity as a Recipient, whereupon such
person's or entity's rights as a third-party beneficiary hereof shall
terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all Shares
owned beneficially or of record by: (i) such Recipient, or (ii) such
customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively, the
"Customers"), but in no event shall any such Shares be deemed owned by
more than one Recipient for purposes of this Plan. In the event that more
than one person or entity would otherwise qualify as Recipients as to the
same Shares, the Recipient which is the dealer of record on the Fund's
books as determined by the Distributor shall be deemed the Recipient as
to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative Support
Services.
(a) The Fund will make payments to the Distributor (i) within forty-
five (45) days of the end of each calendar quarter, in the aggregate
amount of 0.0625% (0.25% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the Shares computed
as of the close of each business day (the "Service Fee"), plus (ii) within
ten (10) days of the end of each month, in the aggregate 0.020833% (0.25%
on an annual basis) of the average during the calendar quarter of the
aggregate net asset value of the Shares computed as of the close of each
business day (the "Asset-Based Sales Charge"). Such Service Fee payments
received from the Fund will compensate the Distributor and Recipients for
providing administrative support services with respect to Accounts. Such
Asset-Based Sales Charge payments received from the Fund will compensate
the Distributor and Recipients for providing distribution assistance in
connection with the sale of Shares.
The administrative support services in connection with the Accounts
to be rendered by Recipients may include, but shall not be limited to, the
following: answering routine inquiries concerning the Fund, assisting in
establishing and maintaining accounts or sub-accounts in the Fund and
processing Share redemption transactions, making the Fund's investment
plans and dividend payment options available, and providing such other
information and services in connection with the rendering of personal
services and/or the maintenance of Accounts, as the Distributor or the
Fund may reasonably request.
The distribution assistance in connection with the sale of Shares to
be rendered by the Distributor and by Recipients may include, but shall
not be limited to, the following: distributing sales literature and
prospectuses other than those furnished to current holders of the Fund's
Shares ("Shareholders"), and providing such other information and services
in connection with the distribution of Shares as the Distributor or the
Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment under
the Plan if it has Qualified Holdings of Shares to entitle it to payments
under the Plan. In the event that either the Distributor or the Board
should have reason to believe that, notwithstanding the level of Qualified
Holdings, a Recipient may not be rendering appropriate distribution
assistance in connection with the sale of Shares or administrative support
services for the Accounts, then the Distributor, at the request of the
Board, shall require the Recipient to provide a written report or other
information to verify that said Recipient is providing appropriate
distribution assistance and/or services in this regard. If the
Distributor or the Board of Directors still is not satisfied, either may
take appropriate steps to terminate the Recipient's status as such under
the Plan, whereupon such Recipient's rights as a third-party beneficiary
hereunder shall terminate.
(b) The Distributor shall make service fee payments to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed 0.0625% (0.25% on an annual basis) of the
average during the calendar quarter of the aggregate net asset value of
Shares, computed as of the close of each business day, constituting
Qualified Holdings owned beneficially or of record by the Recipient or by
its Customers for a period of more than the minimum period (the "Minimum
Holding Period"), if any, to be set from time to time by a majority of the
Independent Directors.
Alternatively, the Distributor may, at its sole option, make service
fee payments ("Advance Service Fee Payments") to any Recipient quarterly,
within forty-five (45) days of the end of each calendar quarter, at a rate
not to exceed (i) 0.25% of the average during the calendar quarter of the
aggregate net asset value of Shares, computed as of the close of business
on the day such Shares are sold, constituting Qualified Holdings sold by
the Recipient during that quarter and owned beneficially or of record by
the Recipient or by its Customers, plus (ii) 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate net
asset value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than one (1) year,
subject to reduction or chargeback so that the Advance Service Fee
Payments do not exceed the limits on payments to Recipients that are, or
may be, imposed by Article III, Section 26, of the NASD Rules of Fair
Practice. In the event Shares are redeemed less than one year after the
date such Shares were sold, the Recipient is obligated and will repay to
the Distributor on demand a pro rata portion of such Advance Service Fee
Payments, based on the ratio of the time such shares were held to one (1)
year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar quarter.
In addition, the Distributor may make asset-based sales charge payments
to any Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate net
asset value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the
Recipient or its Customers. However, no such service fee or asset-based
sales charge payments (collectively, the "Recipient Payments") shall be
made to any Recipient for any such quarter in which its Qualified
Holdings do not equal or exceed, at the end of such quarter, the minimum
amount ("Minimum Qualified Holdings"), if any, to be set from time to time
by a majority of the Independent Directors.
A majority of the Independent Directors may at any time or from time
to time decrease and thereafter adjust the rate of fees to be paid to the
Distributor or to any Recipient, but not to exceed the rates set forth
above, and/or direct the Distributor to increase or decrease the Minimum
Holding Period or the Minimum Qualified Holdings. The Distributor shall
notify all Recipients of the Minimum Qualified Holdings or Minimum Holding
Period, if any, and the rates of Recipient Payments hereunder applicable
to Recipients, and shall provide each Recipient with written notice within
thirty (30) days after any change in these provisions. Inclusion of such
provisions or a change in such provisions in a revised current prospectus
shall constitute sufficient notice. The Distributor may make Plan
payments to any "affiliated person" (as defined in the 1940 Act) of the
Distributor if such affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares are
subject to reduction or elimination of such amounts under the limits to
which the Distributor is, or may become, subject under Article III,
Section 26, of the NASD Rules of Fair Practice. The distribution
assistance and administrative support services to be rendered by the
Distributor in connection with the Shares may include, but shall not be
limited to, the following: (i) paying sales commissions to any broker,
dealer, bank or other person or entity that sells Shares, and/or paying
such persons Advance Service Fee Payments in advance of, and/or greater
than, the amount provided for in Section 3(b) of this Agreement; (ii)
paying compensation to and expenses of personnel of the Distributor who
support distribution of Shares by Recipients; (iii) obtaining financing
or providing such financing from its own resources, or from an affiliate,
for interest and other borrowing costs of the Distributor's unreimbursed
expenses incurred in rendering distribution assistance and administrative
support services to the Fund; (iv) paying other direct distribution costs,
including without limitation the costs of sales literature, advertising
and prospectuses (other than those furnished to current Shareholders) and
state "blue sky" registration expenses; and (v) providing any service
rendered by the Distributor that a Recipient may render pursuant to part
(a) of this Section 3. Such services include distribution assistance and
administrative support services rendered in connection with Shares
acquired (i) by purchase, (ii) in exchange for shares of another
investment company for which the Distributor serves as distributor or sub-
distributor, or (iii) pursuant to a plan of reorganization to which the
Fund is a party. In the event that the Board should have reason to
believe that the Distributor may not be rendering appropriate distribution
assistance or administrative support services in connection with the sale
of Shares, then the Distributor, at the request of the Board, shall
provide the Board with a written report or other information to verify
that the Distributor is providing appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources (which
may include profits derived from the advisory fee it receives from the
Fund), or (ii) by the Distributor (a subsidiary of OMC), from its own
resources, from Asset-Based Sales Charge payments or from its borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan does
not obligate or in any way make the Fund liable to make any payment
whatsoever to any person or entity other than directly to the Distributor.
In no event shall the amounts to be paid to the Distributor exceed the
rate of fees to be paid by the Fund to the Distributor set forth in
paragraph (a) of this Section 3.
4. Selection and Nomination of Directors. While this Plan is in
effect, the selection and nomination of those persons to be Directors of
the Corporation who are not "interested persons" of the Fund or the
Corporation ("Disinterested Directors") shall be committed to the
discretion of such Disinterested Directors. Nothing herein shall prevent
the Disinterested Directors from soliciting the views or the involvement
of others in such selection or nomination if the final decision on any
such selection and nomination is approved by a majority of the incumbent
Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of the
Corporation shall provide at least quarterly a written reports to the
Corporation's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all payments
made and the purpose for which the payments were made. The reports shall
be provided quarterly and shall state whether all provisions of Section
3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be terminated
at any time, without payment of any penalty, by a vote of a majority of
the Independent Directors or by a vote of the holders of a "majority" (as
defined in the 1940 Act) of the Fund's outstanding voting securities of
the Class, on not more than sixty days written notice to any other party
to the agreement; (ii) such agreement shall automatically terminate in the
event of its assignment (as defined in the 1940 Act); (iii) it shall go
into effect when approved by a vote of the Board and its Independent
Directors cast in person at a meeting called for the purpose of voting on
such agreement; and (iv) it shall, unless terminated as herein provided,
continue in effect from year to year only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Amended and Restated Plan has been approved by a vote of the Board and its
Independent Directors cast in person at a meeting called on June 22, 1995
for the purpose of voting on this Plan, and shall take effect after
approval by Class A shareholders of the Fund, at which time it shall
replace the Fund's Plan and Agreement of Distribution for the Shares made
as of November 1, 1988 as amended as of July 27, 1992 and September 1,
1993. Unless terminated as hereinafter provided, it shall continue in
effect from year to year from the date first set forth above or as the
Board may otherwise determine only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Directors cast in person at a meeting called for the purpose
of voting on such continuance. This Plan may not be amended to increase
materially the amount of payments to be made without approval of the
Class A Shareholders, in the manner described above, and all material
amendments must be approved by a vote of the Board and of the Independent
Directors. This Plan may be terminated at any time by vote of a majority
of the Independent Directors or by the vote of the holders of a "majority"
(as defined in the 1940 Act) of the Fund's outstanding voting securities
of the Class. In the event of such termination, the Board and its
Independent Directors shall determine whether the Distributor is entitled
to payment from the Fund of all or a portion of the Service Fee and/or the
Asset-Based Sales Charge in respect of Shares sold prior to the effective
date of such termination.
OPPENHEIMER QUEST VALUE FUND, INC.
By: ____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:____________________________________
Andrew J. Donohue
Executive Vice President
OFMI/value
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND
OPPENHEIMER QUEST VALUE FUND, INC.
FOR CLASS B SHARES OF
OPPENHEIMER QUEST VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
(the "Plan") dated the 22nd day of November, 1995, by and between
OPPENHEIMER QUEST VALUE FUND, INC. (the "Corporation") for the account
of its OPPENHEIMER QUEST VALUE FUND, INC. (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution and
service plan for Class B shares of the Fund (the "Shares"),
contemplated by Rule 12b-1 (the "Rule") under the Investment Company
Act of 1940 (the "1940 Act"), pursuant to which the Fund will
compensate the Distributor for its services in connection with the
distribution of Shares, and the personal service and maintenance of
shareholder accounts that hold Shares ("Accounts"). The Fund may act
as distributor of securities of which it is the issuer, pursuant to the
Rule, according to the terms of this Plan. The Distributor is
authorized under the Plan to pay "Recipients," as hereinafter defined,
for rendering (1) distribution assistance in connection with the sale
of Shares and/or (2) administrative support services with respect to
Accounts. Such Recipients are intended to have certain rights as
third-party beneficiaries under this Plan. The terms and provisions of
this Plan shall be interpreted and defined in a manner consistent with
the provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions pertaining
either to distribution-related expenses or to a plan of distribution,
to which the Fund is subject under any order on which the Fund relies,
issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall
have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Corporation's Board of Directors (the
"Board") who are not "interested persons" (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation
of this Plan or in any agreements relating to this Plan (the
"Independent Directors") may remove any broker, dealer, bank or other
person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or (ii)
such customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed owned
by more than one Recipient for purposes of this Plan. In the event
that more than one person or entity would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer of
record on the Fund's books as determined by the Distributor shall be
deemed the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, (i) within
forty-five (45) days of the end of each calendar quarter, in the
aggregate amount of 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of the
Shares computed as of the close of each business day (the "Service
Fee"), plus (ii) within ten (10) days of the end of each month, in the
aggregate amount of 0.0625% (0.75% on an annual basis) of the average
during the month of the aggregate net asset value of Shares computed as
of the close of each business day (the "Asset-Based Sales Charge")
outstanding for six years or less (the "Maximum Holding Period"). Such
Service Fee payments received from the Fund will compensate the
Distributor and Recipients for providing administrative support
services with respect to Accounts. Such Asset-Based Sales Charge
payments received from the Fund will compensate the Distributor and
Recipients for providing distribution assistance in connection with the
sales of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning the
Fund, assisting in the establishment and maintenance of accounts or
sub-accounts in the Fund and processing Share redemption transactions,
making the Fund's investment plans and dividend payment options
available, and providing such other information and services in
connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may reasonably
request.
The distribution assistance in connection with the sale of Shares
to be rendered by the Distributor and Recipients may include, but shall
not be limited to, the following: distributing sales literature and
prospectuses other than those furnished to current holders of the
Fund's Shares ("Shareholders"), and providing such other information
and services in connection with the distribution of Shares as the
Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it to
payments under the Plan. In the event that either the Distributor or
the Board should have reason to believe that, notwithstanding the level
of Qualified Holdings, a Recipient may not be rendering appropriate
distribution assistance in connection with the sale of Shares or
administrative support services for Accounts, then the Distributor, at
the request of the Board, shall require the Recipient to provide a
written report or other information to verify that said Recipient is
providing appropriate distribution assistance and/or services in this
regard. If the Distributor or the Board of Directors still is not
satisfied, either may take appropriate steps to terminate the
Recipient's status as such under the Plan, whereupon such Recipient's
rights as a third-party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate net
asset value of Shares computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than the minimum
period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed (i) 0.25% of the average during the
calendar quarter of the aggregate net asset value of Shares, computed
as of the close of business on the day such Shares are sold,
constituting Qualified Holdings sold by the Recipient during that
quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting Qualified
Holdings owned beneficially or of record by the Recipient or by its
Customers for a period of more than one (1) year, subject to reduction
or chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed by
Article III, Section 26, of the NASD Rules of Fair Practice. In the
event Shares are redeemed less than one year after the date such Shares
were sold, the Recipient is obligated and will repay to the Distributor
on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of this
paragraph (b) may, at the Distributor's sole option, be made more often
than quarterly, and sooner than the end of the calendar quarter.
However, no such payments shall be made to any Recipient for any such
quarter in which its Qualified Holdings do not equal or exceed, at the
end of such quarter, the minimum amount ("Minimum Qualified Holdings"),
if any, to be set from time to time by a majority of the Independent
Directors.
A majority of the Independent Directors may at any time or from
time to time decrease and thereafter adjust the rate of fees to be paid
to the Distributor or to any Recipient, but not to exceed the rate set
forth above, and/or direct the Distributor to increase or decrease the
Maximum Holding Period, the Minimum Holding Period or the Minimum
Qualified Holdings. The Distributor shall notify all Recipients of the
Minimum Qualified Holdings, Maximum Holding Period and Minimum Holding
Period, if any, and the rate of payments hereunder applicable to
Recipients, and shall provide each Recipient with written notice within
thirty (30) days after any change in these provisions. Inclusion of
such provisions or a change in such provisions in a revised current
prospectus shall constitute sufficient notice. The Distributor may
make Plan payments to any "affiliated person" (as defined in the 1940
Act) of the Distributor if such affiliated person qualifies as a
Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares
are subject to reduction or elimination of such amounts under the
limits to which the Distributor is, or may become, subject under
Article III, Section 26, of the NASD Rules of Fair Practice. The
distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include,
but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that
sells Shares, and/or paying such persons Advance Service Fee Payments
in advance of, and/or greater than, the amount provided for in Section
3(b) of this Agreement; (ii) paying compensation to and expenses of
personnel of the Distributor who support distribution of Shares by
Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other
borrowing costs on the Distributor's unreimbursed expenses incurred in
rendering distribution assistance and administrative support services
to the Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and
state "blue sky" registration expenses; and (v) providing any service
rendered by the Distributor that a Recipient may render pursuant to
part (a) of this Section 3. Such services include distribution
assistance and administrative support services rendered in connection
with Shares acquired (i) by purchase, (ii) in exchange for shares of
another investment company for which the Distributor serves as
distributor or sub-distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the
Board should have reason to believe that the Distributor may not be
rendering appropriate distribution assistance or administrative support
services in connection with the sale of Shares, then the Distributor,
at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC), from
its own resources, from Asset-Based Sales Charge payments or from its
borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan
does not obligate or in any way make the Fund liable to make any
payment whatsoever to any person or entity other than directly to the
Distributor. In no event shall the amounts to be paid to the
Distributor exceed the rate of fees to be paid by the Fund to the
Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Directors. While this Plan is in
effect, the selection and nomination of those persons to be Directors
of the Corporation who are not "interested persons" of the Fund or the
Corporation ("Disinterested Directors") shall be committed to the
discretion of such Disinterested Directors. Nothing herein shall
prevent the Disinterested Directors from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority
of the incumbent Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of the
Corporation shall provide written reports to the Corporation's Board
for its review, detailing services rendered in connection with the
distribution of the Shares, the amount of all payments made and the
purpose for which the payments were made. The reports shall be
provided quarterly, and shall state whether all provisions of Section 3
of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall be
in writing and shall provide that: (i) such agreement may be terminated
at any time, without payment of any penalty, by a vote of a majority of
the Independent Directors or by a vote of the holders of a "majority"
(as defined in the 1940 Act) of the Fund's outstanding voting
securities of the Class, on not more than sixty days written notice to
any other party to the agreement; (ii) such agreement shall
automatically terminate in the event of its assignment (as defined in
the 1940 Act); (iii) it shall go into effect when approved by a vote of
the Board and its Independent Directors cast in person at a meeting
called for the purpose of voting on such agreement; and (iv) it shall,
unless terminated as herein provided, continue in effect from year to
year only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Directors cast in
person at a meeting called for the purpose of voting on such
continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Amended and Restated Plan has been approved by a vote of the Board and
its Independent Directors cast in person at a meeting called on June
22, 1995, for the purpose of voting on this Plan, and shall take effect
after approval by Class B shareholders of the Fund, at which time it
shall replace the Fund's Amended and Restated Distribution Plan adopted
as of December 23, 1994 and Amended and Restated Distribution Agreement
for the Shares dated December 23, 1994. Unless terminated as
hereinafter provided, it shall continue in effect from year to year
thereafter or as the Board may otherwise determine only so long as such
continuance is specifically approved at least annually by a vote of the
Board and its Independent Directors cast in person at a meeting called
for the purpose of voting on such continuance. This Plan may not be
amended to increase materially the amount of payments to be made
without approval of the Class B Shareholders, in the manner described
above, and all material amendments must be approved by a vote of the
Board and of the Independent Directors. This Plan may be terminated at
any time by vote of a majority of the Independent Directors or by the
vote of the holders of a "majority" (as defined in the 1940 Act) of the
Fund's outstanding voting securities of the Class. In the event of
such termination, the Board and its Independent Directors shall
determine whether the Distributor shall be entitled to payment from the
Fund of all or a portion of the Service Fee and/or the Asset-Based
Sales Charge in respect of Shares sold prior to the effective date of
such termination.
OPPENHEIMER QUEST VALUE FUND, INC
By:____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:___________________________________
Andrew J. Donohue
Executive Vice President
AMENDED AND RESTATED
DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
BETWEEN
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
AND OPPENHEIMER QUEST VALUE FUND, INC.
FOR CLASS C SHARES OF
OPPENHEIMER QUEST VALUE FUND, INC.
AMENDED AND RESTATED DISTRIBUTION AND SERVICE PLAN AND AGREEMENT
(the "Plan") dated the 22nd day of November, 1995, by and between
OPPENHEIMER QUEST VALUE FUND, INC. (the "Corporation") for the account
of its OPPENHEIMER QUEST VALUE FUND, INC. (the "Fund") and OPPENHEIMER
FUNDS DISTRIBUTOR, INC. (the "Distributor").
1. The Plan. This Plan is the Fund's written distribution plan
for Class C shares of the Fund (the "Shares"), contemplated by Rule
12b-1 (the "Rule") under the Investment Company Act of 1940 (the "1940
Act"), pursuant to which the Fund will compensate the Distributor for
its services incurred in connection with the distribution of Shares,
and the personal service and maintenance of shareholder accounts that
hold Shares ("Accounts"). The Fund may act as distributor of
securities of which it is the issuer, pursuant to the Rule, according
to the terms of this Plan. The Distributor is authorized under the
Plan to pay "Recipients," as hereinafter defined, for rendering (1)
distribution assistance in connection with the sale of Shares and/or
(2) administrative support services with respect to Accounts. Such
Recipients are intended to have certain rights as third-party
beneficiaries under this Plan. The terms and provisions of this Plan
shall be interpreted and defined in a manner consistent with the
provisions and definitions contained in (i) the 1940 Act, (ii) the
Rule, (iii) Article III, Section 26, of the Rules of Fair Practice of
the National Association of Securities Dealers, Inc., or its successor
(the "NASD Rules of Fair Practice") and (iv) any conditions pertaining
either to distribution-related expenses or to a plan of distribution,
to which the Fund is subject under any order on which the Fund relies,
issued at any time by the Securities and Exchange Commission.
2. Definitions. As used in this Plan, the following terms shall
have the following meanings:
(a) "Recipient" shall mean any broker, dealer, bank or other
person or entity which: (i) has rendered assistance (whether direct,
administrative or both) in the distribution of Shares or has provided
administrative support services with respect to Shares held by
Customers (defined below) of the Recipient; (ii) shall furnish the
Distributor (on behalf of the Fund) with such information as the
Distributor shall reasonably request to answer such questions as may
arise concerning the sale of Shares; and (iii) has been selected by the
Distributor to receive payments under the Plan. Notwithstanding the
foregoing, a majority of the Corporation's Board of Directors (the
"Board") who are not "interested persons" (as defined in the 1940 Act)
and who have no direct or indirect financial interest in the operation
of this Plan or in any agreements relating to this Plan (the
"Independent Directors") may remove any broker, dealer, bank or other
person or entity as a Recipient, whereupon such person's or entity's
rights as a third-party beneficiary hereof shall terminate.
(b) "Qualified Holdings" shall mean, as to any Recipient, all
Shares owned beneficially or of record by: (i) such Recipient, or (ii)
such customers, clients and/or accounts as to which such Recipient is a
fiduciary or custodian or co-fiduciary or co-custodian (collectively,
the "Customers"), but in no event shall any such Shares be deemed owned
by more than one Recipient for purposes of this Plan. In the event
that more than one person or entity would otherwise qualify as
Recipients as to the same Shares, the Recipient which is the dealer of
record on the Fund's books as determined by the Distributor shall be
deemed the Recipient as to such Shares for purposes of this Plan.
3. Payments for Distribution Assistance and Administrative
Support Services.
(a) The Fund will make payments to the Distributor, within forty-
five (45) days of the end of each calendar quarter, in the aggregate
amount (i) of 0.0625% (0.25% on an annual basis) of the average during
the calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Service Fee"), plus
(ii) 0.1875% (0.75% on an annual basis) of the average during the
calendar quarter of the aggregate net asset value of the Shares
computed as of the close of each business day (the "Asset-Based Sales
Charge"). Such Service Fee payments received from the Fund will
compensate the Distributor and Recipients for providing administrative
support services with respect to Accounts. Such Asset-Based Sales
Charge payments received from the Fund will compensate the Distributor
and Recipients for providing distribution assistance in connection with
the sale of Shares.
The administrative support services in connection with the
Accounts to be rendered by Recipients may include, but shall not be
limited to, the following: answering routine inquiries concerning the
Fund, assisting in establishing and maintaining accounts or sub-
accounts in the Fund and processing Share redemption transactions,
making the Fund's investment plans and dividend payment options
available, and providing such other information and services in
connection with the rendering of personal services and/or the
maintenance of Accounts, as the Distributor or the Fund may reasonably
request.
The distribution assistance in connection with the sale of Shares
to be rendered by the Distributor and by Recipients may include, but
shall not be limited to, the following: distributing sales literature
and prospectuses other than those furnished to current holders of the
Fund's Shares ("Shareholders"), and providing such other information
and services in connection with the distribution of Shares as the
Distributor or the Fund may reasonably request.
It may be presumed that a Recipient has provided distribution
assistance or administrative support services qualifying for payment
under the Plan if it has Qualified Holdings of Shares to entitle it to
payments under the Plan. In the event that either the Distributor or
the Board should have reason to believe that, notwithstanding the level
of Qualified Holdings, a Recipient may not be rendering appropriate
distribution assistance in connection with the sale of Shares or
administrative support services for the Accounts, then the Distributor,
at the request of the Board, shall require the Recipient to provide a
written report or other information to verify that said Recipient is
providing appropriate distribution assistance and/or services in this
regard. If the Distributor or the Board of Directors still is not
satisfied, either may take appropriate steps to terminate the
Recipient's status as such under the Plan, whereupon such Recipient's
rights as a third-party beneficiary hereunder shall terminate.
(b) The Distributor shall make service fee payments to any
Recipient quarterly, within forty-five (45) days of the end of each
calendar quarter, at a rate not to exceed 0.0625% (0.25% on an annual
basis) of the average during the calendar quarter of the aggregate net
asset value of Shares, computed as of the close of each business day,
constituting Qualified Holdings owned beneficially or of record by the
Recipient or by its Customers for a period of more than the minimum
period (the "Minimum Holding Period"), if any, to be set from time to
time by a majority of the Independent Directors.
Alternatively, the Distributor may, at its sole option, make
service fee payments ("Advance Service Fee Payments") to any Recipient
quarterly, within forty-five (45) days of the end of each calendar
quarter, at a rate not to exceed (i) 0.25% of the average during the
calendar quarter of the aggregate net asset value of Shares, computed
as of the close of business on the day such Shares are sold,
constituting Qualified Holdings sold by the Recipient during that
quarter and owned beneficially or of record by the Recipient or by its
Customers, plus (ii) 0.0625% (0.25% on an annual basis) of the average
during the calendar quarter of the aggregate net asset value of Shares
computed as of the close of each business day, constituting Qualified
Holdings owned beneficially or of record by the Recipient or by its
Customers for a period of more than one (1) year, subject to reduction
or chargeback so that the Advance Service Fee Payments do not exceed
the limits on payments to Recipients that are, or may be, imposed by
Article III, Section 26, of the NASD Rules of Fair Practice. In the
event Shares are redeemed less than one year after the date such Shares
were sold, the Recipient is obligated and will repay to the Distributor
on demand a pro rata portion of such Advance Service Fee Payments,
based on the ratio of the time such shares were held to one (1) year.
The Advance Service Fee Payments described in part (i) of the
preceding sentence may, at the Distributor's sole option, be made more
often than quarterly, and sooner than the end of the calendar quarter.
In addition, the Distributor shall make asset-based sales charge
payments to any Recipient quarterly, within forty-five (45) days of the
end of each calendar quarter, at a rate not to exceed 0.1875% (0.75% on
an annual basis) of the average during the calendar quarter of the
aggregate net asset value of Shares computed as of the close of each
business day, constituting Qualified Holdings owned beneficially or of
record by the Recipient or its Customers for a period of more than one
(1) year. However, no such service fee or asset-based sales charge
payments (collectively, the "Recipient Payments") shall be made to any
Recipient for any such quarter in which its Qualified Holdings do not
equal or exceed, at the end of such quarter, the minimum amount
("Minimum Qualified Holdings"), if any, to be set from time to time by
a majority of the Independent Directors.
A majority of the Independent Directors may at any time or from
time to time decrease and thereafter adjust the rate of fees to be paid
to the Distributor or to any Recipient, but not to exceed the rates set
forth above, and/or direct the Distributor to increase or decrease the
Minimum Holding Period or the Minimum Qualified Holdings. The
Distributor shall notify all Recipients of the Minimum Qualified
Holdings or Minimum Holding Period, if any, and the rates of Recipient
Payments hereunder applicable to Recipients, and shall provide each
Recipient with written notice within thirty (30) days after any change
in these provisions. Inclusion of such provisions or a change in such
provisions in a revised current prospectus shall constitute sufficient
notice. The Distributor may make Plan payments to any "affiliated
person" (as defined in the 1940 Act) of the Distributor if such
affiliated person qualifies as a Recipient.
(c) The Service Fee and the Asset-Based Sales Charge on Shares
are subject to reduction or elimination of such amounts under the
limits to which the Distributor is, or may become, subject under
Article III, Section 26, of the NASD Rules of Fair Practice. The
distribution assistance and administrative support services to be
rendered by the Distributor in connection with the Shares may include,
but shall not be limited to, the following: (i) paying sales
commissions to any broker, dealer, bank or other person or entity that
sells Shares, and/or paying such persons Advance Service Fee Payments
in advance of, and/or greater than, the amount provided for in Section
3(b) of this Agreement; (ii) paying compensation to and expenses of
personnel of the Distributor who support distribution of Shares by
Recipients; (iii) obtaining financing or providing such financing from
its own resources, or from an affiliate, for interest and other
borrowing costs of the Distributor's unreimbursed expenses incurred in
rendering distribution assistance and administrative support services
to the Fund; (iv) paying other direct distribution costs, including
without limitation the costs of sales literature, advertising and
prospectuses (other than those furnished to current Shareholders) and
state "blue sky" registration expenses; and (v) providing any service
rendered by the Distributor that a Recipient may render pursuant to
part (a) of this Section 3. Such services include distribution
assistance and administrative support services rendered in connection
with Shares acquired (i) by purchase, (ii) in exchange for shares of
another investment company for which the Distributor serves as
distributor or sub-distributor, or (iii) pursuant to a plan of
reorganization to which the Fund is a party. In the event that the
Board should have reason to believe that the Distributor may not be
rendering appropriate distribution assistance or administrative support
services in connection with the sale of Shares, then the Distributor,
at the request of the Board, shall provide the Board with a written
report or other information to verify that the Distributor is providing
appropriate services in this regard.
(d) Under the Plan, payments may be made to Recipients: (i) by
Oppenheimer Management Corporation ("OMC") from its own resources
(which may include profits derived from the advisory fee it receives
from the Fund), or (ii) by the Distributor (a subsidiary of OMC), from
its own resources, from Asset-Based Sales Charge payments or from its
borrowings.
(e) Notwithstanding any other provision of this Plan, this Plan
does not obligate or in any way make the Fund liable to make any
payment whatsoever to any person or entity other than directly to the
Distributor. In no event shall the amounts to be paid to the
Distributor exceed the rate of fees to be paid by the Fund to the
Distributor set forth in paragraph (a) of this Section 3.
4. Selection and Nomination of Directors. While this Plan is in
effect, the selection and nomination of those persons to be Directors
of the Corporation who are not "interested persons" of the Fund or the
Corporation ("Disinterested Directors") shall be committed to the
discretion of such Disinterested Directors. Nothing herein shall
prevent the Disinterested Directors from soliciting the views or the
involvement of others in such selection or nomination if the final
decision on any such selection and nomination is approved by a majority
of the incumbent Disinterested Directors.
5. Reports. While this Plan is in effect, the Treasurer of the
Corporation shall provide at least quarterly a written reports to the
Corporation's Board for its review, detailing services rendered in
connection with the distribution of the Shares, the amount of all
payments made and the purpose for which the payments were made. The
reports shall be provided quarterly and shall state whether all
provisions of Section 3 of this Plan have been complied with.
6. Related Agreements. Any agreement related to this Plan shall
be in writing and shall provide that: (i) such agreement may be
terminated at any time, without payment of any penalty, by a vote of a
majority of the Independent Directors or by a vote of the holders of a
"majority" (as defined in the 1940 Act) of the Fund's outstanding
voting securities of the Class, on not more than sixty days written
notice to any other party to the agreement; (ii) such agreement shall
automatically terminate in the event of its assignment (as defined in
the 1940 Act); (iii) it shall go into effect when approved by a vote of
the Board and its Independent Directors cast in person at a meeting
called for the purpose of voting on such agreement; and (iv) it shall,
unless terminated as herein provided, continue in effect from year to
year only so long as such continuance is specifically approved at least
annually by a vote of the Board and its Independent Directors cast in
person at a meeting called for the purpose of voting on such
continuance.
7. Effectiveness, Continuation, Termination and Amendment. This
Amended and Restated Plan has been approved by a vote of the Board and
its Independent Directors cast in person at a meeting called on June
22, 1995 for the purpose of voting on this Plan, and shall take effect
after approval by Class C shareholders of the Fund, at which time it
shall replace the Fund's Plan and Agreement of Distribution for the
Shares made as of September 1, 1993 as amended February 1, 1995.
Unless terminated as hereinafter provided, it shall continue in effect
from year to year from the date first set forth above or as the Board
may otherwise determine only so long as such continuance is
specifically approved at least annually by a vote of the Board and its
Independent Directors cast in person at a meeting called for the
purpose of voting on such continuance. This Plan may not be amended to
increase materially the amount of payments to be made without approval
of the Class C Shareholders, in the manner described above, and all
material amendments must be approved by a vote of the Board and of the
Independent Directors. This Plan may be terminated at any time by vote
of a majority of the Independent Directors or by the vote of the
holders of a "majority" (as defined in the 1940 Act) of the Fund's
outstanding voting securities of the Class. In the event of such
termination, the Board and its Independent Directors shall determine
whether the Distributor is entitled to payment from the Fund of all or
a portion of the Service Fee and/or the Asset-Based Sales Charge in
respect of Shares sold prior to the effective date of such termination.
OPPENHEIMER QUEST VALUE FUND, INC.
By: ____________________________________
OPPENHEIMER FUNDS DISTRIBUTOR, INC.
By:____________________________________
Andrew J. Donohue
Executive Vice President
Independent Auditors' Consent
To the Shareholders and Board of Directors of Oppenheimer Quest
Value Fund, Inc. (formerly, Quest for Value Fund, Inc.):
We consent to the use of our report dated December 20, 1995
included herein and to the references to our Firm under the
headings "Financial Highlights" in the Prospectus and "Independent
Accountants" in the Statement of Additional Information.
/s/ KPMG Peat Marwick LLP
- - - - - - - - - - - - -
KPMG Peat Marwick LLP
New York, New York
February 8, 1996
Oppenheimer Quest Value Fund, Inc.
Exhibit 24(b)(16) to Form N-1A
Performance Data Computation Schedule
The Fund's average annual total returns and total returns
are calculated as described below, on the basis of the Fund's
distributions, for the past 10 years which are as follows:
Class A Shares
Distribution Amount From Amount From
Reinvestment Investment Long or Short-Term Reinvestment
(Ex)Date Income 1 Capital Gains Price
05/28/86 0.1980000 1.8220000 27.270
12/22/86 0.0000000 0.7700000 25.860
05/29/87 0.2660000 0.9100000 27.270
12/22/87 0.1530000 1.1230000 22.840
12/27/88 0.3040000 1.1180000 25.150
12/28/89 0.7700000 1.6400000 27.600
12/28/90 0.4890000 0.0000000 25.360
07/01/91 0.0000000 0.0000000 10.040
12/17/91 0.0000000 0.6390000 9.720
12/30/91 0.0730000 0.0000000 10.380
12/18/92 0.0430000 0.5450000 11.640
12/31/92 0.0040000 0.0000000 11.770
11/22/93 0.0000000 0.4693000 11.740
12/31/93 0.0404000 0.0000000 12.020
12/05/94 0.0000000 0.8279000 11.130
12/30/94 0.0830000 0.0000000 11.200
Class B Shares
11/22/93 0.0000000 0.4693000 11.730
12/31/93 0.0306000 0.0000000 12.020
12/05/94 0.0000000 0.8279000 11.070
12/30/94 0.0743000 0.0000000 11.140
Class C Shares
11/22/93 0.0000000 0.4693000 11.730
12/31/93 0.0325000 0.0000000 12.020
12/05/94 0.0000000 0.8279000 11.060
12/30/94 0.0813000 0.0000000 11.130
Oppenheimer Quest Value Fund, Inc.
Page 2
1. Average Annual Total Returns for the Periods Ended 10/31/95:
The formula for calculating average annual total return is as follows:
1 ERV n
--------------- = n (---) - 1 = average annual total return
number of years P
Where: ERV = ending redeemable value of a hypothetical $1,000 payment
made at the beginning of the period
P = hypothetical initial investment of $1,000
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,175.67 1 $2,264.74 .2
(---------) - 1 = 17.57% (---------) - 1 = 17.76%
$1,000 $1,000
Ten Year
$3,259.58 .1
(---------) - 1 = 12.54%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales charge
of 5.00% for the first year and 3.00% for the inception year:
One Year Inception
$1,190.84 1 $1,250.46 .4615
(---------) - 1 = 19.08% (---------) - 1 = 10.87%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales
charge of 1.00% for the first year, and 0.00% for the inception year:
One Year Inception
$1,230.96 1 $1,279.79 .4615
(---------) - 1 = 23.10% (---------) - 1 = 12.06%
$1,000 $1,000
Oppenheimer Quest Value Fund, Inc.
Page 3
1. Average Annual Total Returns for the Periods Ended 10/31/95 (continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,247.40 1 $2,402.91 .2
(---------) - 1 = 24.74% (---------) - 1 = 19.16%
$1,000 $1,000
Ten Year
$3,458.30 .1
(---------) - 1 = 13.21%
$1,000
Class B Shares
One Year Inception
$1,240.84 1 $1,280.47 .4615
(---------) - 1 = 24.08% (---------) - 1 = 12.09%
$1,000 $1,000
Class C Shares
One Year Inception
$1,240.96 1 $1,279.79 .4615
(---------) - 1 = 24.10% (---------) - 1 = 12.06%
$1,000 $1,000
Oppenheimer Quest Value Fund, Inc.
Page 4
2. Cumulative Total Returns for the Periods Ended 10/31/95:
The formula for calculating cumulative total return is as follows:
(ERV - P) / P = Cumulative Total Return
Class A Shares
Examples, assuming a maximum sales charge of 5.75%:
One Year Five Year
$1,175.67 - $1,000 $2,264.74 - $1,000
------------------ = 17.57% ------------------ = 126.47%
$1,000 $1,000
Ten Year
$3,259.58 - $1,000
------------------ = 225.96%
$1,000
Class B Shares
Examples, assuming a maximum contingent deferred sales
charge of 5.00% for the first year and 3.00% for the inception year:
One Year Inception
$1,190.84 - $1,000 $1,250.46 - $1,000
------------------ = 19.08% ------------------ = 25.05%
$1,000 $1,000
Class C Shares
Examples, assuming a maximum contingent deferred sales
charge of 1.00% for the first year, and 0.00% for the inception year:
One Year Inception
$1,230.96 - $1,000 $1,279.79 - $1,000
------------------ = 23.10% ------------------ = 27.98%
$1,000 $1,000
Oppenheimer Quest Value Fund, Inc.
Page 5
2. Cumulative Total Returns for the Periods Ended 10/31/95 (Continued):
Examples at NAV:
Class A Shares
One Year Five Year
$1,247.40 - $1,000 $2,402.91 - $1,000
------------------ = 24.74% ------------------ = 140.29%
$1,000 $1,000
Ten Year
$3,458.30 - $1,000
------------------ = 245.83%
$1,000
Class B Shares
One Year Inception
$1,240.84 - $1,000 $1,280.47 - $1,000
------------------ = 24.08% ------------------ = 28.05%
$1,000 $1,000
Class C Shares
One Year Inception
$1,240.96 - $1,000 $1,279.79 - $1,000
------------------ = 24.10% ------------------ = 27.98%
$1,000 $1,000
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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